Learning Objectives

• 1. Understand the importance of negotiation for startup ventures

• 2. Familiarize with historical developments of negotiation

• 3. Understand factors that impact the effectiveness of negotiation at individual and group levels

• 4. Understand the difference between integrative and distributive negotiation

• 5. Familiarize with outcomes of poor negotiation

Opening Scenario: Disney’s Purchase of Lucasfilm

Walt Disney Company made a surprise announcement that it was acquiring Lucasfilm. Lucasfilm was founded by George Lucas who owned the famous Stars Wars brand. Walt Disney agreed to pay US$ 4.05 billion split evenly between stock and cash for the deal. Lucas was the sole shareholder of Lucasfilm.

The acquisition bolstered Disney’s status as a leader in animation and superhero films. It was a beneficial deal for Disney as the company had rights to Star Wars and afforded them the opportunity to reap benefits from related merchandizing and media business. Disney promised to begin producing new Star Wars films every two to three years. The acquisition included a great deal of negotiation and even included a detailed script for three upcoming Stars Wars films.

The 68-year-old Lucas founded Stars Wars, and he had extensive negotiations with Disney before he settled for terms of purchase. After the purchase, it was agreed that Lucas will serve as a consultant for the acquired Star Wars brand. Lucas had been planning to retire for years. In a past interview with the Times, Lucas revealed that he was tired of the pressure of living up to the expectation of Star Wars fans.

According to Walt Disney Chairman Robert Iger, a famous negotiator in Hollywood, he and Lucas conducted the negotiations personally. Speaking of Lucas’ decision to hand over his creative legacy to Disney, Igor told, “There was a lot of trust there.” The acquisition of Star Wars by Disney illustrates the importance of building trust through successful negotiations when dealing with a powerful counterpart.

Startup Ventures and Negotiation

Startups are business ventures in their nascent stage and do not have a fully developed business models or other related strategic frameworks. Such ventures often lack funding and tend to rely on external funding to take their specialized products or services to market.