What's a good deal?

Entrepreneurs and managers are human, and one inescapable characteristic of human nature is social comparison. The implication for relationships is that each partner is constantly processing his or her observations into a subjective judgment of whether the particular relationship is "fair".

Problems arise when one or both partners think the relationship is inequitable - that is, their partner is getting a better deal from the relationship, either by receiving greater benefits or incurring proportionally lesser costs, than they are.

In that situation and if they have the opportunity, individuals may use many avenues to try to resolve the inequity and restore "fairness" (besides simply ending the "unfair" relationship). Thus, a low-cost manufacturer in Asia may contractually provide a high-end goods company the leverage to enjoy high margins on its products.

Because of the imbalance in bargaining power and subsequent profit-sharing, the manufacturer may feel entitled to breach the copyright/patent regulations and shift the often-blurred line between "legal" and "illegal/counterfeit".

The challenge, therefore, is not only to manage one's own end of the "good deal", but also to be aware of how a partner perceives fairness in the relationship. One partner's satisfaction with the relationship is usually not enough. The other partner may be attempting to subtly, or less subtly, adjust what he sees as an unfair arrangement.

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Thavorn Srisukato, Founder of Federal Commercial Inc. www.nysetechnical.com www.frmexam.com www.offshorepro.info
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Courtesy of:The Powerful Financial Directory

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