Cable TV – Role: John Ward

Case Overview:

Mayor John Ward, representing the town council of Clayton, Oklahoma, and Mr. Peter Stone, representing MicroCable Inc., are negotiating over the terms of a cable franchise. They negotiate three key issues:

  1. the price the town residents would have to pay for their subscriptions,
  2. the date by which the system should be fully operational (the completion date)
  3. the number of cable channels to be offered.

Neither party is certain about the other’s preferences.

The following are the average conditions of such agreements for a town of the size of Clayton:

  1. 1.Price: from $15 to $45 per month
  2. 2.Completion time:  Varies between 6 and 12 months.
  3. 3.Number of Channels:  Varies from 24 to 48.

The negotiation should not exceed 30 minutes.

Role of John Ward

You are John Ward. You place greatest importance in a speedy completion date, partly because of the up-coming election campaign, in which you are up for re-election (in 8 months from now). Within the range of feasible prices and numbers of channels, you care approximately the same about the price, which you would like to minimize, and the number of channels, which you would like to maximize.

In preparing for the negotiation, you recall the experience of a colleague who had negotiated with a different cable company. Your colleague had publicly expressed a strong interest in a quick completion time —which he ultimately obtained but only after having paid a horrendous price. You fear that Stone would respond opportunistically to a similar announcement, insisting that fast completion would be very costly but that perhaps he could arrange it in return for very high prices and few channels.

Such an agreement would be barely acceptable to you and the town, but would, you guess, be quite desirable for MicroCable Inc.

Thus, you elect to be a bit cagey and plan to downplay you interests in completion and the number of channels. You also plan to exaggerate your interest in a low price, with the hope of ultimately making a seemingly big concession on that issue in return for a big gain on completion and channels.

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