MGT 445 Week 2 Learning Team Assignment Case Study Analysis Part A GÇ£Power Play for HowardGÇ¥
MGT 445 Week 2 Learning Team Assignment Case Study Analysis Part A GÇ£Power Play for HowardGÇ¥ MKT421
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Date Created: 11/13/15
Running head: CASE STUDY ANALYSIS PART A "POWER PLAY FOR 1 HOWARD" Case Study Analysis Part A "Power Play for Howard" Team Members MGT/445 July 24, 2011 Instructor CASE STUDY ANALYSIS PART A "POWER PLAY FOR HOWARD" 2 Case Study Analysis Part A "Power Play for Howard" Negotiation can be complex and involve a difficult process for both parties. The negotiation process involves the elements of relationship, communication, interests, options, standards, alternatives, and commitments. Both parties must have a checklist before starting a negotiation to help to organize the flow of the negotiation process. Juwan Howard is a 23year old athlete who plays basketball for Washington Bullets. The negotiation between the Miami Heat and the Washington Bullets over Juwan Howard’s free agent contract was intense and difficult. The integrative bargaining had both parties use different approaches to the negotiation process to reach the most profitable agreement. Juwan Howard’s contract between the Miami Heat and the Washington Bullets shows how Juwan Howard was the first national basketball association player to sign a contract making over a $100 million dollars between intangible and tangible benefits (Lewicki, Saunders, & Barry, 2006). Learning Team A will summarize and discuss Juwan’s case by evaluating the intangible and tangible benefits, and evaluate the costs and risks in association with negotiating the contract of Juwan Howard and both teams’ general managers. Evaluation of Benefits Buying and selling of sportsmen is normal in sports in today’s society. Wherever involving buying and selling negotiations are a must. The purpose of these dialogues is to find a way of ensuring maximum benefit for everyone. However, as an ideal scenario is impossible, so some parties involved have to miss a few and maybe all the benefits he or she wanted from the deal. CASE STUDY ANALYSIS PART A "POWER PLAY FOR HOWARD" 3 The process of two people or groups coming to a mutual contract about different wants or thoughts is negotiation. Negotiations bring two kinds of benefits, tangible (measurable, countable like money) and intangible (feelings: loyalty, satisfaction). In the case study under observation, involved are more than two parties, and they reaped some rewards. The man at the center Juwan Howard did not only gain monetary security, something he had sought from the start but also the pleasure of playing for his favorite team. He wanted to stay at Washington Bullets and wanted to cash his golden playing years to the maximum. When pushed into a corner he chose a tangible reward over the intangible one because common perception is money buys everything. His happiness mainly stemmed from the uncountable gift. He did not hesitate to rejoin the Bullets overjoyed at the first chance, which shows intangible rewards hold sway over their counterpart. Bullets received back their most valuable player, meaning pleasure of winning and as a consequence big money. The most important made them jump at the chance of receiving him back was the approval of their supporters. Unseld obtained a chance of saving face by securing the opportunity to form a match winning combination, another intangible reward. Falk’s interest was the benefit of his client and in return monetary benefits. Riley, the only one to lose made the Heats lose face in front of fans. All these intangible benefits indirectly led to the securing of money. Hence, securing of tangible rewards is dependent on the gain of intangible ones. The reason, they are associated to items more valuable than money, like love, freedom, happiness, pleasure, etc. Evaluate Cost Associated with the Negotiation CASE STUDY ANALYSIS PART A "POWER PLAY FOR HOWARD" 4 Juwan Howard was a promising basketball player for the Washington Bullets who became a free agent and was in the process of negotiating his contract. At the time of Juwan’s free agency he was one of the top players for the Washington Bullets. Juwan did not initially resigned with the Washington Bullets as he turned down their offer of $78.4 million over seven years. Juwan Howard decided that the offer of $100 million for seven years from the Miami Heat was more lucrative and signed the contract with the Miami Heat. Within thirty days the Miami Heat contract was proven invalidated and Juwan Howard wind up signing with the Washington Bullets anyway. Since Juwan Howard did not accept their initial offer, there could have been a sense of reputation risk as the general manager of the Washington Bullets stated that he believed Juwan Howard decision was primarily based on money (Lewicki, Barry, & Saunders, 2007, Chapter 3). This can give a sense of a lack of loyalty from a prior business relationship that was fruitful. Additionally, the cost risk that can be absorbed from the Washington Bullets would be that Juwan Howard’s performance may decrease and since his contract is guaranteed, the franchise would still have to pay his contract. On the other hand, there were legal obstacles within the contract negotiations with the Miami Heat which actually went to arbitration. For the owners of the Miami Heat, the cost risk would be that they would still have to payout the contract the Juwan Howard and not have the player at the same time which would be like giving away money. Apparently, in the end Washington Bullets increased their contract for Juwan Howard to $100.8 million because they wanted Juwan to stay and wanted a happy player and the Miami Heat gave up their fight in the arbitration proceeding for the act of exceeding the salary cap by $9 million which was against leagues rules at the time. The Miami Heat was fined $5 millions CASE STUDY ANALYSIS PART A "POWER PLAY FOR HOWARD" 5 for violation which was additional cost to the franchise and also included a one year suspension of the general manager (Seattle Times News Services, 1996) Evaluation of Risks Taking into consideration the exorbitant amounts of money in the negotiations associated with the “Power Play for Howard”, the risks here will be based upon the competitive range of salaries awarded through the National Basketball League to its players. This is mentioned due to the fact that as far as negotiations are concerned, risks are generally associated with detrimental losses of tangible and intangible benefits. Although Howard showed some emotional inclination (his intangible benefit) to remain as a player for the Washington Bullets; as is his case as well as that of most “bigbusiness” negotiations, it became a matter of “how much” (a monetary tangible benefit) as opposed to “why”. For simplicity, Lewicki, Saunders, and Barry (2005) describe this concept as differences in risk tolerance, wherein they state, “People differ in the amount of risk they are comfortable assuming.” (p. 17) In the case of Howard, the main risk to him was wagering his salary based upon the outcome of the arbitration taking place between the league and union concerning the legalities of a salary cap as outlined in his signed contract with Miami. Basically, the dispute concerned as to whether or not Howard’s contract with Miami, based on the definition of “unlikely” and “likely bonuses vs. “the cap” was, in fact, legal. Salary caps are to be taken seriously in the industry of the NBL, Kesenne (2000) relays its importance in stating, “This NBAstyle salary cap not only imposes a maximum amount but also a minimum amount of money that must be spent on player salaries. It follows that CASE STUDY ANALYSIS PART A "POWER PLAY FOR HOWARD" 6 the small clubs need some subsidization from the big clubs so as to be able to pay the salaries.” (p. 423). This left Howard in a very vulnerable position. Howard’s risk specifically involved the fact that if Miami (with whom he possessed the contract in dispute) lost the arbitration fight with the league, that as a result, a limited supply of monies would be available by other NBA organizations to pay him even close to the anticipated salary of that of an athlete with his competitive value. ““Howard concluded…that if he backed Miami and the team lost a protracted fight with the league, other NBA clubs might have as little as $40 million or $50 million to offer him for seven years. In effect, he would take a $50 million pay cut and become, he said, “a laughingstock.””” (Lewicki, Saunders, and Barry, 2005, p. 623) In conclusion, Howard decided to, in compliance with union and league rules in reference to disapproved contracts (that as his with Miami), sign a second contract offered by the Bullets in Washington. This act, also in accordance with union and league regulations, further determined arbitration between Miami and the league null. Any risk to Howard was now eliminated. He signed a contract of equal monetary amount as that offered by Miami. This decision ultimately satisfying his nontangible benefit as well, as this is where Howard wanted to remain in the first place – playing basketball in his same numbered uniform for the Bullets. Conclusion In the case of Juwan Howard, the negotiation process was one that took a great deal of evaluation by all parties involved to come to a final agreement. Even after both sides felt they CASE STUDY ANALYSIS PART A "POWER PLAY FOR HOWARD" 7 had come to terms on a contract the NBA found faults that sent them right back to the negotiation table. In this particular situation Juwan Howard was being pulled in different directions because he wanted to remain loyal to the Washington Bullets but felt that he deserved a more lucrative contract based off his ability and talent, and the Miami Heat were proving to be more willing to pay him what he felt was his market value. Unfortunately, league rules ended up getting in the way of the deal that would have made Juwan Howard a member of the Miami Heat, and forced him to look at alternatives. As it turned out, the Washington Bullets increased their offer to Juwan Howard making his final decision much easier because he could play the game he loved while receiving the monetary compensation equal to that of his talent and ability. Thus, he signed with the Washington Bullets with a contract that satisfied both the tangible and intangible benefits he was looking for while reducing his risk. The final outcome proved to be a winwin situation for all parties involved. CASE STUDY ANALYSIS PART A "POWER PLAY FOR HOWARD" 8 References Kesenne, S. (2000). The Impact of Salary Caps in Professional Team Sports. Scottish Journal of Political Economy, 47(4), 422430. Retrieved from EBSCOhost. Lewicki, R. J., Barry, B., & Saunders, D. M. (2007). A Power Play for Howard. In J. E. Biernat, R. Blankenship, & A. J. Belda (Eds.), Negotiation (pp. 616626). th Lewicki, R.J., Saunders, D.M., Barry, B. (2005). Negotiations, 5 ed. The McGrawHill Companies, NY, USA Seattle Times News Services. (1996). Miami Heat Might Abandon Battle For Juwan Howard. Retrieved from http://community.seattletimes.nwsource.com/archive/? date=19960808&slug=2343229
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