Reference no: EM132831688

Back in 1996, Steve Case's AOL was urgently seeking a top-notch internet browser to market their products. Both Bill Gates' Microsoft and Netscape Navigator were vying with AOL to take them on as a client. In terms of their Best Alternative (BA or BATNA), Netscape held a decisive advantage due to its strong technical superiority, presence, and dominance in the overall browser market. Microsoft was just in the process of entering the market and held a fledgling percentage of the overall browser market, but had a long way to go relative to Netscape's much superior overall market hold. Additionally, Microsoft's browser was also considered technically inferior to Netscape's. Despite this unequal valuation of their positions, Bill Gates had deemed that gaining a greater presence and market share of the browser market was a competitive priority.

Netscape adopted the position that since they were so powerfully based, they would only negotiate with AOL by holding out for a high per-copy fee. In essence, the deal would have been based on a "browser for dollars" agreement. Steve Case, the CEO of AOL viewed the position of Netscape as: "They [Netscape] were very aggressive about selling the browser, but they wanted a very high per-copy fee. The attitude was, 'We're so hot, we'll license to everyone, so you better take it'."

Discussion Question:

Imagine that you are Steve Case's lead negotiation strategist preparing to commence negotiations with Netscape. Based on the scenario described above and your own additional research into the dispute:

Question:

1. Brief summary of the conflict and the rationale behind the decision by each party to negotiate.

2. Summary self-assessment of AOL