...Zopa is a UK-based peer-to-peer (P2P) online brokerage that links British residents who want to lend with those who would like to borrow. The idea was formed because of the increasing amount of 'freeformers', who are defined as project-based, self employed or freelance workers who weren't in full-time employment [Kupp et al. 2007], and had fluctuating incomes. Zopa describe peer-to-peer lending as a "smarter, fairer and more human way of doing money" which contrasts to the traditional banking model [Zopa Website]. In this essay I plan to discuss the uniqueness of Zopa and their business model in relation to existing financial institutions. Following this I will analyse Zopa's competitive advantage and then discuss Zopa's main competitors and how they could create barriers to entry for late entrants. 1) Begin your essay by discussing how Zopa is different from existing financial institutions. Table 1 Due to the combined impact of the financial crisis causing access to credit to tighten, the increasing multi financial service products available, and the competitive rates, Zopa's members count has been able to grow to 140,000 in 2007. Table 1 can help provide a better understanding of how Zopa is operationally different to other financial institutions. Firstly, Zopa, unlike their rival larger financial institutions, only carries one product through personal loans. In contrast is RBS's seventy different services across a range of deposit accounts with over 14 million personal...
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...The Zopa business model It is an exchange that offers a platform to borrowers and lenders to meet to get solutions to the monetary needs in the form of personal loan. There is not a single borrower to whom a lender’s money is parcelled out; it is at least distributed among 50 borrowers to reduce the risk to lender’s money. Zopa earns from borrowers 1% as fee against the loan and commission against repayment protection insurance. Zopa wanted to gain a market share of 0.2% to break even the UK loan market, which it seemed would be realised in the next 18 months after its operation. The primary advantage to borrowers by opening their account at Zopa is that they can borrow in small quantities at cheaper rates for brief periods. Banks do just the opposite of it where loans get cheaper if taken in huge for a long period of time. Such borrowers whose credit rating is not good enough in banks can avail personal loans at Zopa easily by borrowing through their online marketplace (Chaffey, 2008). Zopa lenders also remain in better positions than they would have been if they had invested in banks, as Zopa marketplace offers better earning; they earn 20-30% more at Zopa than what they would earn through a deposit account. To remain on the safe side, lenders select the minimum interest rate at which they would lend after taking note of bad debt in various markets within Zopa. Borrowers are out in various risk divisions with varying interest rates based on their credit records to help lenders...
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...Section I 1. Summarize key points of each speaker on the causes and handling of the Great Recession, in particular their views on the FED actions during the crisis Ben Bernanke, former chairman of the Federal Reserve Board. Ben Bernanke points that the key triggers of the crisis were decline in house prices and the associated mortgage losses and that the effects of them were amplified by vulnerabilities in the economy and financial system. He allocates such private vulnerabilities: * Borrowers and lenders took on too much debt * Banks and other financial institutions failed to adequately monitor and manage the risks they were taking * Firms relied on short term funding such as commercial paper * The increased use of exotic financial instruments concentrated risk Public sector vulnerabilities: * Gaps in regulatory structure * Supervision of banks and bank holding companies (FED did not press hard enough on the issue of measuring a risk) and many banks did not have a capacity to understand the risk, they were taking, and supervisors should press them harder to develop the capacity. * There were failures in the regulation of the customer protection * Individual agencies looked at different parts of the business and nobody was really in charge in looking to see whether there was problems related to the overall financial system * Fannie Mae and Freddie mac that were operating with an inadequate capital to back their guaranties. Their...
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...Zopa 1. Zopa is the world’s oldest peer-to-peer lending and borrowing services. They provide a matching solution that brings people who want to borrow with individual who want to lend. So Zopa was considered industrial-scale online financial matchmakers at which point borrowers or companies with savers willing to put money aside for longer in order to hunt for higher return. According to Martin Lewis 2014, showed the comparison interest rate between peer-to-peer lending and original bank (see table below). |Savings interest vs peer-to-peer predicted returns |Easy access |3-year fix |5-year fix | |(best pre-tax rates at June 2014) | | | | |Normal savings |1.5% |2.7% |3.1% | |Peer-to-peer websites |2.5% (1) |5.2% (2) |6.2% (3) | Therefore, as a member of the team at the investor reviewing the viability of the Zopa business. There are some criteria that should analyze to evaluate potential future of Zopa: -Target Market: Zopa completely aim to new market that never exists in whatever business model. The consumer-to-consumer lending and borrowing financial online market appears. Zopa...
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...BATNA and know when to walk away. If the requested value is at least within the ZOPA, a decision can be made where both parties will benefit. When negotiating salary, the first thing I will do is ask the counterparty what he values most in a company and what he hopes to get out of working at the firm. I would not want someone to work for the company for only financial purposes. I would negotiate the lowest possible amount to determine if they are still interested in the job position. In this situation, I would try to keep within the ZOPA, because if the salary is too low, the candidate might deny the job offer. This can be seen as the barrier. While negotiating work schedule, it should be assumed that they are able to work forty hours per week. During the negotiation of the work schedule, it is important to ask if they are available to work over time and how many personal days they need. If the candidate requests more days than what is actually offered, I will tell them that the company only allows a specific amount of personal holidays for a full time employee. Therefore, the personal holidays are non-negotiable. In the event that the candidate requests for a much higher salary and more personal holidays, it might be beneficial to me to reconsider the candidate. Assessing my BATNA, I can offer the position to someone else with the same credentials, that will consider a salary within the ZOPA and agree on the company’s holiday...
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...Negotiations Frasier case A. Who are the parties in the Frasier negotiation and what are their interests? (Viacom, CBS, Paramount, Kelsey) – (NBC, NBC West Coast ((Graboff)), ABC) The parties involved in the Frasier negotiations consist of NBC, Paramount, and actor Kelsey Grammar. Paramount and Kelsey had personal interest to extend the show 3 years. Kelsey Grammar wanted to rank in history as being an actor with having the record for the longest-running primetime television character in TV. Without Kelsey Grammar (Frasier), Paramount, and NBC would not have a TV series. NBC did not view the show Frasier as having another 3 years of life and did not want to invest in another 3 years. Additionally, NBC deemed Paramount’s price per episode to high and wanted to minimize what they saw as a loss of revenue. B. What is Paramount’s BATNA? What is your estimate of their reservation price? Paramount was banking on the fact that Frasier was the flagpole show of NBC and its success in the time slot. If they quit NBC, both Paramount and NBC would suffer while Paramount would have suffered the most. Paramount best alternative would have been to shop the show around to other networks in the case that the negotiations with NBC broke down. Paramount however was limited in networks to promote the show to due to the shows high overhead cost and industry consolidation. Due to these circumstances I would estimate Paramount’s reservation price around 5.25 million as Paramount...
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...andParamount, the owner of the show. While the National Broadcasting Company (NBC) wants topay under $5 million in order to make a profit on the show, Paramount seemed to bedemanding $ 6 million per episode. Paramount came down to $5.5 million later.Q.2. What is NBC's BATNA? What is Paramount's BATNA? What is your best estimate of theirrespective reservation prices? Is there a ZOPA?Answer:NBCs BATNA: The fact that Paramount didnt have a BATNA. If they switch networks the showwould lose viewership, which will affect the studio as well as the network to which they move.So whatever NBC was offering them was the best deal they can get. And Graboff knew the CBSnetwork pretty well and was pretty sure they wouldnt buy Frasier at such a high cost.Moreover this might kick off a price war that will ruin the networks industry and people mightreconsider getting shows from paramount for their bad dealing.Paramounts BATNA: It didnt have one. But they were relying heavily on the fact that Frasierwas the flagpole show of NBC. But if they quit NBC, both the parties will suffer, whileParamount will suffer the most.ZOPA: The ZOPA would be something that NBC had offered, the creative bonus offer based onratings. If Paramount things their show is good enough, they must go for the bonus offer, buttry and fix the slot. Slot is important because NBC might later switch slots to bring the...
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...For the buyer, it's what you think you could do in terms of replacing the content or product, and the price involved, if the deal fell through. RESERVATION PRICE = the maximum or minimum--depending on whether you're the buyer or seller--at which you would be indifferent between doing the deal, and not doing the deal If you are the seller, this is the minimum price that you'd take; it's one at which you're indifferent to whether the deal gets done. If it's a dollar less, you'd prefer to walk; if it's a dollar higher, you'd do the deal. If you're the buyer, it's the maximum price you'd pay, and you'd be indifferent to doing the deal at that price point. Again, if it's a dollar higher, you walk; if a dollar lower, you'd take the deal. ZOPA (ZONE OF POSSIBLE AGREEMENT) = When the parties are "in the same ballpark" with respect to terms and pricing. Final Assignment We're going to analyze a real, albeit slightly older, deal here from the perspective of the main players (and there are several). Hopefully those players (at least their companies) and the property is familiar to you; this deal negotiation took place in 2001. The case in question is on the Harvard Business School Press site; access it (at a cost of $3.95) using this link. Here are the topics I want you to address in your analysis of this deal negotiation; I'm going to introduce into our work here a couple of new-ish concepts (although they were touched on in Getting to Yes) that I want you to explore on...
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...10/2/2015 ONLINE MGT 430: NEGOTIATIONS Week 1: Negotiation Concepts and Styles “If you’re bold enough to bargain, you can reap big bucks.” Consumer Reports, August, 2013 • Just 48% of Americans have tried bargaining over everyday goods and services in the past three years (2010 survey) • Down from 61% in 2007 • 89% who tried on furniture saved an average of $300 • Cell phone plans, eye glasses, credit card fees, doctors, lawyers, jewelry, appliances – what else? Why Don’t We Negotiate More? • 35% refuse to bargain, period • 20% of women say it makes them uncomfortable – Men? • Why do we feel uncomfortable? • Ages 18‐29 enjoy it the most, over 60 the least • 43% who earn less than $50K/yr have tried, compared with 58% of higher earners Consumer Reports, August, 2013 1 10/2/2015 What is a Negotiation? “Broadly defined, negotiation is the process of back-and-forth communication aimed at reaching agreement with others when some of your interests are shared and some are opposed.” (Ury, Getting Past No) “A negotiation is an interactive communication process that may take place whenever we want something from someone else of another person wants something from us” (Shell, Bargaining For Advantage) Why Learn to Negotiate Better? • Personal: Improve your ability to create and claim value for yourself • Getting a “good deal” in business transactions (car, house, sales contracts) • Advancing your career (job offers, promotions) ...
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...theory might apply…where was the break-down…get specific – Missing obvious chance to apply concepts: “We had ten people all going in different directions” – Goal alignment – Vague or general terms: “We had a problem with communications” how and why was this a problem…did it effect motivation by breaking a link from expectancy theory or unbalance inputs and outputs. © James Berry 2013 3 Negotiations The Basics Dr. James Berry Lecturer University College London james.berry@ucl.ac.uk © James Berry 2013 4 Negotiation Skills © James Berry 2013 5 Objectives • • • • Briefly review what negotiation is Highlight why it might be important Review your BioPharm/Seltek negotiations Key things to know (BATNA, Reservation Price, ZOPA, Target Price) • Negotiate Case: Recruit © James Berry 2013 6 Negotiation is… • The process where two or more parties decide what each will give and take in the context of their relationship . . . © James Berry 2013 7 Negotiation is… • A bargaining and influence process designed to reach agreement about a decision or outcome • A core leadership and management competency • Most people are not effective negotiators – Over 80% of corporate execs and CEOs leave money on the table – Even effective negotiators have skills that can be sharpened and bad habits that can be broken © James Berry 2013 8 Matters...
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...NBC’s BATNA: The fact that Paramount didn’t have a BATNA. If they switch networks the show would lose viewership, which will affect the studio as well as the network to which they move. So whatever NBC was offering them was the best deal they can get. And Grab off knew the CBS network pretty well and was pretty sure they wouldn’t buy “Frasier” at such a high cost. Moreover this might kick off a price war that will ruin the networks industry and people might reconsider getting shows from paramount for their bad dealing. Paramount’s BATNA: It didn’t have one. But they were relying heavily on the fact that “Frasier” was the flagpole show of NBC. But if they quit NBC, both the parties will suffer, while Paramount will suffer the most. ZOPA: The ZOPA would be something that NBC had offered, the creative bonus offer based on ratings. If Paramount things their show is good enough, they must go for the bonus offer, but try and fix the slot. Slot is important because NBC might later switch slots to bring the ratings...
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...Assignment 2 - Personal Negotiation Analysis NAME: Siddharth Surana CLASS: Monday Class Date: 10/31/11 FACTUAL NEGOTIATION BACKGROUND The deal that I will be talking about is a series of negotiations that took place on behalf of my company, represented by me, and an external customer (Sam), who is a multinational corporation dealing with minerals. My company (Jose) is a minerals manufacturing company. Sam used to purchase one of their 2 Raw materials from us and the other material was outsourced from the UK. This deal is about us setting up a new unit, in India, solely manufacturing the second raw material that Sam imported. As this product was really expensive for Sam to import, they were also eagerly looking for partners to manufacture this high quality product in India. This was a win – win situation for both the companies, as for us, Jose, we were getting the chance to increase our product line and revenues and for the, Sam, to reduce their cost of raw materials drastically. This would be a very important deal for Sam as the industry was getting really competitive with a lot many companies selling similar products at a cheaper price. Sam completely trusted our company with quality as we have been dealing from 2 decades now. The issues that we have been considering and talking about are as follows: 1. The initial investment is very high, as new set of machinery has to be ordered. 2. The land is required with a lot of permissions from the government....
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...In the negotiation role-play, I was Mrs. Gibson. My counterpart, Mr. Parker, and I reached a final price of $25K for the parcel of land. At the end of the negotiation, and even after the class discussions, both he and I were satisfied by the result of the negotiation. Opening and working together rather than against each other I tried to start the negotiation even before actually talking about the topic at hand. Per the advice of Wheeler (pg 145-146), I wanted this negotiation to be friendly and easy to both sides. I wanted to create an atmosphere where Mr. Parker and I were working on the same side towards a common goal: the transfer of ownership of the parcel of land. If we were both comfortable and agreeable with each other, he would be more receptive to the offers I made. In order to achieve this, I used words such as “we/us” and compared Parker’s other offer to an opposing team. Fortunately, Mr. Parker responded to my openness with friendliness of his own. The entire negotiation stayed on this positive note and Mr. Parker conceded at very fast rates going from $50K to $30K to $25K whereas I increased gradually from $15K to $20K to $25K. The effects of anchoring and resisting I was scared of making the first offer, and rightly so. After the class discussion, it was obvious there was a slight correlation between the initial offer and the final negotiated price. The extreme final prices came mostly from prices that started too high or too low. Mr. Parker initially wrote...
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...Mapletech-Yazawa Case Mapletech Perspective Features and general aspects of the Negotiation Issues Get the contract Set the price per unit for the headlamps Parties 1. Mapletech (primary) 2. Yazawa (primary) Nature of relationships: One time relationship between Mapletech and Wasuzu One time deal between Mapletech and Yazawa All the relationships are in the same level of hierarchy given that they are all (or will be) business partners. BATNA’s, Reservation Values and Aspiration Values MapleTech BATNA: Waste the extra capacity and continue to earn CAN$4.8 million. This BATNA also excludes the extra spending to modify the production line. Reservation Value: $10 per unit Aspiration Value: $30 per unit Yazawa BATNA: Get agreement with Japanese rival company. Reservation Value: unknown (price per unit that rival company is offering) Aspiration Value: unknown (price per unit of rival - $1) Other features of the negotiation Are contracts binding? Yes, Yazawa has a contract with Wazusu that has to fulfill. And Mapletech will sign one with Yazawa if the deal is reach where will be specified that Mapletech can only provide 60,000 units. Is there a linkage? The negotiation will have an effect on the relationship between Yazawa and Wazusu. It will also affect the business relation between Yazawa and...
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...China Microfinance Market: the untamed territory Greg Au-Yeung When people talk about China’s financial market, they naturally refer to the capital market such as stock trading, or the banking sector like personal savings or commercial lending. After all, this is the mainstream market, which is more visible to the outside world. There is a lesser known territory which already catches the attention of foreign investors over the past few years. It is the microfinance market. By definition, it is financial services for micro-entrepreneurs, small businesses, and individuals who lack access to traditional banking services. The Market In China, microfinance products range from consumer loans to commercial lending. Similar to other nations, this financial market segment has become a necessity rather than a choice. The growth of China’s microfinance market is also fueled by an imbalanced financial eco-system and the central government’s strict control of interest rates which resulted in banks deserting this market segment. Subsequently, new operators arose to provide financial aid for those in need. This includes microfinance (microcredit) and guarantee companies, P2P (person to person) lenders, as well as underground banks. Although there are banks in China that also provide microloans, they are still relatively small and not regarded as a mainstream service. Middle Kingdom’s Challenges in Borrowing It is not news that many enterprises and individuals struggle to secure loans...
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