Question One
In 1980, baseball players entered into a strike that lasted for eight days as they negotiated to retain the free agency policy that allowed them to play for any team. Their wishes were granted and the strike was called off. Other reasons that necessitated the cancellation of the strike was the fact that the players were not paid during the strike, especially in spring training. Although the last days of the training were interrupted, the start of the regular season in 1981 continued as planned. To some, all was well until later in the mid-season when the players for another strike. Unlike before, the strike lasted for almost two months, making it one of the major strikes in the history of baseball. Players were pissed off by the fact that the owners wanted compensation for the free agency, negotiations that went against their earlier agreement (Schmidt and David, 474). All in all, the players and the owners eventually reached an agreement. The BATNA choice made by the players was however questionable because they could have negotiated for better pay without going on strike. For instance, the players should have agreed on owners’ compensation ask and in turn request for improved pay both during the spring training and in the season. The strike caused major loses for both parties, not to mention the fact that the owners lost their popularity amongst the fans.
Question Two
I am mostly interested in starting a business pertaining the sale of electrical appliances, most specifically the sale of laptops. Since the business already has many investors or competitors running it, I intend to create a value net model that will make my business entirely different, yet serving the needs of the customers in the most effective manner. Besides the customers, I intend to focus on the best strategy to keep a good relationship with my suppliers to ensure that am always on stock, and I receive quality products at the best favorable prices. Value net model involves efficient relationship between a business and its customers, suppliers, competitors, and the complementors (Da-li). With such a deal, I will manage to charge my customers fair prices which in turn will earn me better place in the market in comparison to my competitors. Since there is more than one room for successful operation of the business, I am willing to team up with another company dealing with production and the sale of laptop in order to dominate the market. However, I plan to use the most overlooked value net strategy as my main strategy for this particular business. For instance, the method involves the use of complementors. In my case, a company dealing with laptop repair will serve a great purpose as a complementor. Many customers buy laptops but face the challenge of repair whenever they are damaged. The problem is mostly caused by untrustworthy persons who charge high cost for a mere repair. Partnering with a repair company, I will charge all my customers, a subsidized price in comparison to other people coming for repair. This will surely earn me and my partner a larger market because most individuals are scared of uncertainties and would rather purchase an item where they can take for repair in case of a damage.
Question Three
A contract provision that turns variable cost into fixed cost in case the buyers back out from the initial agreement protects the supplier from other competition in many ways. For instance, in the current example where a business agrees to buy 100 units of commodities at 80 dollars per unit, they will still pay 60 dollars for any unit they fail to buy. This means that the supplier will be protected in terms of production cost, especially in cases associated with perishable commodities. Also, the buyers will opt to pay the 80dollars to purchase every unit agreed upon other than buy from another supplier who is selling the same commodity at 60 dollars. The reason for this is that the buyers will have to pay 60 dollars per unit to the new supplier plus another 60 dollars per every unit not purchased from the first supplier. In that case, the deal becomes expensive for the buyers, making them stick to the first deal. Indeed, the suppliers’ competition will be discouraged to steal the buyers because they can’t afford to sell their commodities at a price less than 20 dollars per unit. For the second supplier, selling at a price less than 20 dollars per unit is the only deal that would benefit the buyer, a price that is surely impossible to charge.
Works Cited
Da-li, H. U. "Study of Enterprise Competitive Strategy Based on Value Net Model [J]." China Industrial Economy 9 (2006): 010.
Schmidt, Martin B., and David J. Berri. "The impact of the 1981 and 1994-1995 strikes on Major League Baseball attendance: A time-series analysis." Applied Economics 34.4 (2002): 471-478.
