The tanning industry is a billion-dollar business today and thousands of tanning salons have sprouted up across cities and suburbs, as people in the society quest for the attractive tanned skin, an impression of affluence and wealth. In the US alone, more than one million people on an average day show up at tanning salons, the industry boasting an estimated $2.6 billion of revenue in 2010 (Willett, 2010). Despite the rate at which the tanning industry is growing, potential challenges existent pose serious setbacks on a small business start up.
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The success of the tanning salon business today depends on the unique aspects of its owner and the kind of services incorporated into the business. It requires creativity in order to subvert the advanced claims from scientific quotas regarding its health effects. For instance, despite being a lucrative venture, critics of the industry have advanced claims of biological damages, such as skin cancer, wrinkles, aging, and the development of melanomas among others (Cellich & Jain, 2012). However, this scientific information has failed to articulate that various skins react to things differently, and that even some people’s skin has been allergic to some food such as meat and fruits. Congruently, a realization that skins react to various chemicals, temperature, and environments differently, will help come up with a tanning salon that first tastes a customer’s for potential skin allergies before carrying out tanning services, one that provides personalized and indoor tanning. Noteworthy, while tanning as a power to prevent sunburn and increase of vitamin D synthesis, it does not react in the same way to every person (Cellich & Jain, 2012). Therefore, depending on the environment and the allergic nature of a customer’s skin, taking into account various challenges in the industry, a small business start up in the tanning salon industry must focus on generating alternative solutions to these challenges. Moreover, in order to equip the tanning salon with safe tanning beds and skin testing machines one needs a start up capital of about $300,000 dollars to help install good facilities to monitor and enhance the tanning services. The unique aspects of this tanning salon business will also consider the demographic location, the size of the store, set up costs, environmental safety, painting, IT connection systems, tanning beds, and the quality of lotions and beach accessories. Prior to starting the business, the purpose of this presentation is to agitate negotiations for a business loan of $500,000 to fund the business.
Understanding the Problem and Needs
Despite the public’s negative perception to the tanning industry, research indicates that there are less players looking at a more innovative way to run the business. Studies indicate that tanning beds emit UVA and UVB radiation at levels that can be as much as 15times stronger than the sun (Cellich & Jain, 2012). In relation to these radiations, problems have been compounded by the fact that the eyes and genitalia are often not protected and are highly susceptible to the damaging radiation. In consideration of this associated problems, the tanning industry altogether requires a different approach in order to give customers a great experience despite the big-brand mentality. Much of the tanning business salons consist of a couple of beds in the backroom of a hair salon, looking like an industry that is searching for a winning business model (Cellich & Jain, 2012). Furthermore, it seems that most owners of these salons have failed to tackle well the challenges the industry is facing. With this realization, this business start up will focus on opening a tanning salon that is consists of a health club model with a membership approach where every customer’s skin health is given the first priority. The bulbs in tanning beds must be monitored and replaced frequently to keep the emitted UV levels at determined standards, since most facilities used by other salons have been found to fall short of this requirement, thereby causing even more exposure to the customer (Heckman & Manne, 2012). The need to purchase safe tanning beds, which do not cause skin damage, is the priority of this small business venture.
Generating Alternative Solutions
The first solution is ensuring compliance with tanning regulations particularly in indoor tanning. Currently, manufacturers of indoor tanning equipment must adhere to FDA mandated requirements for sunlamp specifications, positing of warning labels, and provision of appropriate eye protection (Heckman & Manne, 2012). The sale of sunlamps or sun beds that are used for cosmetic purposes are not, however, required to undergo any sort of pre-sale clearance, and most of the FDA’s regulation of sunlamps occurs at the review level of product reports from manufacturers, periodic inspections of manufacturers, and frequent FDA field-office inspection of salons (Heckman & Manne, 2012). Moreover, tanning facility operator education may help reduce injury and increase implementation of indoor tanning regulations. The staff in the salon will be trained to conduct a focused clinical history and brief physical exam to identify those potential clients at an increased risk for skin cancer who should avoid UV exposure. Moreover, a required license to deliver indoor tanning sessions could help fund the tanning salon inspection efforts, thus helping to ensure adherence to regulations. Licensed tanning bed operators will be trained regarding the risks associated with indoor tanning.
Furthermore, the salon will sell membership at about $20 per month for unlimited tanning. Since most tanning salons were charging $10 or more per tanning session, this offer for a month will be an affordable luxury that is likely to increase magical membership rise.
This tanning salon will start with 20 tanning beds and will provide personalized services for each customer including lotions and skin care for all skin types. All employees will be Smart Tan certified and trained to give each person the royal treatment. Moreover, the salon will ensure monthly promotions on tanning to assure best discounts to customers. The use of bronzers, sunless tanning lotions, and spray will be safer for the salon. These methods will temporarily dye the outer skin layer without exposing the skin to harmful UV rays from the sun or tanning beds (Cellich & Jain, 2012). They have no reported effects and may be used in conjunction with the anti-aging or skin enhancement program.
Negotiation Strategy as the Overall Plan
People frequently get into negotiation in the world where conflict abounds, to get what they want or even get along. Negotiations are normally associated with the positive consequences for entrepreneurs and the business community at large (De Dreu, 2000). They include relations that are satisfactory and economic prosperity. This comes as no surprise for the social scientists have established fascinations that are long-term studying how people negotiate when resolving divergent interests and the way they arrive at mutual understanding. Failed negotiations can be costly for organizations that may lead to failed financial losses, missed opportunities that can threaten the survival of business (De Dreu, 2000). The purpose of this paper is to challenges associated with small business start up in the tanning salon industry. The focal of this paper is to discuss negotiation strategy as the overall plan to achieve business goals in Tanning Salon Industry.
Many businesses are establishing strategies for everything they do. During this process, business spend enormous amount of resources in the creation, development, and fine turning of these strategies such as HR strategy, product strategy, R&D strategy, and product strategy. Just think of Toyota, Apple, or Microsoft operating without defined strategies or generating a financial budget (Jensen, 2012). This would be almost unthinkable. Nonetheless, countless businesses are establishing negotiation strategies though they lack defined rational approach when relating with their customers, suppliers, and other stakeholders. There is no established policy that show business organization when dealing with strategic partners despite the known fact that ‘business is human’. This has resulted to connections and relationships are built on optimal low levels of openness, profitability, and trust (Gettinger, Koeszegi, & Schoop, 2012). Yet the contextual factors they do not result consistently to competitive analysis generating the worst impasse and best suboptimal outcomes.
For the success of negotiation process, preparation is the key. Before negotiation, several factors must be considered:
- the scope of the negotiation and in the case tanning salon is to secure the best location, buy high quality equip, get the best labor rates, and ensure that the business complies with the environmental safety issues with OSHA.
- Ensure that both parties understand the variables for negotiations such as price, performance and payment plans.
- Whether the business is willing to face the consequences when the negotiator arrives at concessions and what the business would ask for in return
- The risks involved and the business is willing to take for a future greater return.
- The business must also consider the threshold of pain upon which negotiation scope can be established. The said elements are considered in the preparation stage. Depending on the various aspect of the negotiation, many questions must be addressed.
Preparation for negotiations should begin long before the formal negotiation begins. The essence of effective negotiation is to acquire as much information as one can about the opponent’s interests and goals. It is significant to know what people he or she must appease and the strategy to be used. This information will help one to better understand the opponent’s behavior, to predict one’s responses to my offers, and to frame solutions in terms of one’s interests. Research indicates that concessions tend to be reciprocated and lead to agreements. As a result, one ought to being bargaining with a positive overture, perhaps a small concession and then reciprocate the opponent’s concessions. Furthermore, the negotiations will address problems not personalities, and when the negotiations get tough, one ought to avoid the tendency to attack the opponent. It is essential to treat an initial offer as merely a point of departure. If conditions are supportive, one will look for an integrative solution, framing the options in terms of my opponent’s interests and looking for solutions that can allow the opponent as well as oneself to declare a victory.
Getting a Bigger Piece of the Pie in Negotiation
The first question that business and business partners ask is how they should negotiate. For the sake of simplicity, this sums to only to options: co-operation and Zero-sum games. In co-operations, benefit is created through the establishment of environment that is based on transparency, honesty, openness, and trust. Ideally, this might sound simple but this demands a lot of negotiator’s effort. Conversely, with zero-sum games they are charged emotionally with combative approaches leading to solutions that are low quality. Zero-sum games employ shortsighted haggling that in many instances leads to lose-lose outcomes (Jensen, 2012). One of the important tool that is used in the creation of the cooperative climate is negotiation code of conduct at the Market Watch Centre for Negotiation. With this code, behavioral rules are established to guide businesses through the most challenging situations (Jensen, 2012). This entails statements on what businesses will and what will not do, under what circumstances for the sake of preserving honesty and integrity (Jensen, 2012). This sets the right communication for creation of positive environment.
In the Tanning Salon Industry, the consistent link between outcomes and context is only seen when negotiation is viewed as a static process rather by which individuals pursue their stated goals while maintaining their strategic choices. Nevertheless, negotiations presented as static in a given time proves to be implausible. In such a dynamic industry, negotiations change the behavior in response to the behavior of the negotiating parties (Stroebel, 2003). While the theory of negotiation purports the outcome of the context-outcome relationship that comparatively mute the shape of negotiation process and its context. The negotiation process focuses on the exchange between the negotiating parties.
The objective of this paper is to develop a theoretical framework that captures emergent and dynamic negotiation aspects in the establishment of new tanning salon. Describing how and when negotiators can move form broad strategic approaches that create value and those that claim value (Stroebel, 2003). This theoretical framework has abroad spectra on the long-term change that reflects on shift perceptions in the relationship and the context of negotiations and short-term changes that reflects on responses that are immediate to new information. Some of these changes are securing a great demographic location with a store of 1200 sqft, managing tangibles items of cost, store set up costs, electric connections, environmental safety issues with OSHA, painting, IT store systems of sale and security, tanning bed purchasing vs. leasing, equip warranties, as well other associated items of small sale such as lotions, and beach accessories.
From this, we can argue the process of negotiations can be characterized by periods that are contemporary to the process of maintenance where a strategic stable approach is observed and the process shifts, where instability of the strategic approach is observed (De Dreu, 2000). When negotiating for shift for a strategic stability for the above said changes, it is good to have a proper understanding on how to develop a prescriptive theory that gives the negotiators the ability to intervene effectively on the process negotiation while creating beneficial mutual solutions. Capturing the dynamic nature and emergent aspect of negotiation gives managers and business owners’ powerful tools that control the process thus harnessing more functional and beneficial outcomes.
It is easier for the tanning salon to establish competitive informed cooperation if the negotiation strategy is well developed. It becomes easier for the negotiators and improves the flow of information and personal chemistry enabling a partnership that ensures that problem making is important (Olekalns & Weingart, 2008). With this in mind, tanning salon can create a benefit; establish long-term relationships, and increasing innovation. Consider the case of tanning salon business and the equipment supplier. In spite of focusing solely on the price of the equipment, the two parties can share more about the warranties and suggested periods. They can settle on extended warranties would add more value on the equipment. The bottom-line to this settlement is that the extended warrantee will reduce the overall risk because of the after sale service that comes with this kind of warrantee while at the same time increasing profitability for the two sides – a win-win relationship that unlock the usage and potential value of the relationship and the unlock value. Of course the world we live in is not a perfect world and negotiations go as planned as final outcomes are distorted by our desires, wishes, emotions, and subconscious wishes (Pruitt, 1981). By taking such a lead, tanning salon can take the lead and come up with a negotiation strategy placing them on a far better position with the objective of achieving of achieving more value that what they had anticipated.
Negotiating for Great Demographic Location
One aspect that cripples the wonderful tanning salon is the poorly negotiated lease. Every business has a criterion for location. Selecting the right location remains to be the most important to unique business such as the tanning business. ‘Location, location, location’ the success or failure of the tanning salon will largely depend on the selectivity and judgment of the owner on location. The tanning salon lease is a factor that will add value in the determination of practice. Therefore, a lease that has been poorly negotiated can lead to economic consequences that are passed paying too much rent. The lease normally has a direct impact on the transition in the practice of tanning. This can have a direct impact on the transition and value creation.
Negotiating Environmental Safety issues with OSHA
Occupational Safety and Health Administration or OSHA, consent for workplace safety regulations while at the same time sets the requirements. The activities of the employers are governed y OSHA. In addition, the tanning salon will be an employer and thus getting in an employment contact with employees, associates, and partners. Different states have different regulations and so far, there 23 states have these regulatory programs. So are liberal will others have stronger penalties and stricter requirement. Moreover, the tanning salon is yet to follow suit and has to comply on the work place safety compliance. Most of these policies do not give room for negotiation but in some cases, they do are negotiable. Poor negotiations may lead to severe penalties such as civil and criminal penalty.
Tanning Bed Purchasing vs. Leasing
When faced with the dilemma of buying a tanning bed or leasing, it is good to analyze carefully the economic feasibility that will ensure growth. Too much money can be spent leasing a tanning bed than just buying one. With a good negotiator, a greater encumbrance on financial is possible. Generally, the salon has options that are chose when funding a purchase: SBA loans, Leasing, paying cash, and the traditional band financials. As a new business, leasing is not the should be the last resort after considering all other options. This option has failed or in many instances, it has proven difficult. On a more established business, leasing a tanning table is more beneficial though extreme caution should be taken through a negotiation on the term of the lease for the sake of landing a fair deal.
Not every negotiation will be successful. One must be willing to walk away from any negotiation if parties cannot come to a mutually agreeable solution. If one’s needs are not going to be met by the outcome of the negotiation, one can walk away. It is significant to also consider the possibility that the person one is negotiating with may walk away. If the opponent is not going to get what one needs from the negotiated outcome, it is their right too to walk away from the negotiation.
Sometimes when we are negotiating, we are so caught up in what we want, forgetting to consider other ways to get it. If one has a negotiation list of alternative ways to get one’s needs met, one is likely to have negotiations that are more successful. If I wanted a $500,000 limit, I may consider reducing the number of tanning beds for the beginning so that I can reduce the negotiating figure to $300,000. Alternatives should still meet one’s needs but can also offer a partner different ways of meeting them. A negotiation is really only successful if it reaches the conclusion and the participants do not know what to do next. Just because the scene one is negotiation at does not come about, does not man one is bad, but rather incompatible at that time. One may want to negotiate with the person again in the future, and these negotiations may lead to successful scenes or relationships.
Desired outcomes thru integrative negotiations
In integrative negotiation, the focus is on determining the merits of the issues and finding ways to satisfy one another’s needs. The integrative approach ideally leads to some form of cooperation or problem solving to achieve a mutually desirable solution. Some negotiators believe the task becomes easier when both the parties trust each other and reveal their reservation points. Therefore, they can negotiate to share the surplus in a rational fashion. However, the problem in negotiations is not a matter of trust, but strategy. The strategy calls for maximizing the surplus. Thus, trusting the other party will only cause conflict. Furthermore, a negotiator should make sure the other party is not lying. One ought to watch for any inconsistencies in the answers to other party responses. A negotiator should not rush into making a final offer, an irrevocable commitment, until one is ready. Once the negotiator reaches the point, at which one is comfortable walking away from the negotiations, only then should one take the stance of final offer.
Strategic Choice and Context
Negotiation is presented as a goal-oriented activity classified as integrative (cooperative) and distributive (competitive) strategies. These are used when pursuing both relationship and outcome goals. Pruitt (1981) articulates in his Dual Concern Model that there are four strategic opinions based on the competitor’s emphases on achieving own goals and those of the other party’s (Pruitt, 1981). In his model, Pruitt suggests that negotiators can either hold cooperative goal focusing on creation of value for both parties, and goals that are individualistic that focuses on oneself value creation (Pruitt, 1981). Typically, both distributive and integrative theories carry risks. Integrative is an accommodation enacted when the negotiators lose sight of protection of their own interests. This in the end results to suboptimal outcomes and is dissatisfied by the relationship. In this case, competition turn out to be an overly contentious when negotiators lose interest on their goals to an arrangement in the end triggering escalatory deadlock and spiral (Pruitt, 1981). For the said reason, negotiators are now focusing on problem solving, a strategy that calls for a sensible blend of competing and cooperating whist striving for maximum outcomes for both parties. Therefore, for tanning salon business, integrative negotiation strategies is best suited. For the collaborative or rather a problem solving approach, that is best described as a strategy that is recognized as a strategy that produce long-term agreements that would meet both parties aspirations (Pruitt, 1981). From these benefits, a central concern for understanding the ways that negotiators effectively craft for the sake of the mutual solutions that would indeed deliver rational and of course in this scenario save money when establishing the new business. The negotiation process unfolds over the time giving a better understanding.
Negotiation process can be analyzed into two assumptions: (a) Negotiations outset the contextual factors that increases individualistic salience and cooperative outcomes goal and (b) negotiation is an activity that is goal-oriented. Moreover, if these conditions are not withstood for crafting mutual benefits, negotiators requires the balance between the dual goals that create value when reaching an agreement and value clemency that will ensure satisfaction for tanning business. From this, tanning salon negotiators need to mix integrative strategies with distributive strategies that claim business value with distributive strategies valuing claiming value. They need to move between the strategies that are potentially inconsistent with the intended outcome goals. To trigger the shift between value creation and value claim, negotiators recognizes the strategic path and what is blocking the achievement of the goals.
Indoor tanning will be an efficient and convenient way to tan, particularly in climates that are not conducive to continues sun-tanning throughout the year, a stance that makes the business to be lucrative throughout the year. In addition to appearance enhancement, some people tan for mood advancement or for social reasons, a reality that promises the availability of the market for the business. The tanning industry has promoted the new UVA tan as safe, and credits the technology that will stimulate even stronger commercial growth. Te new tanning beds that will be used will also be more comfortable, because they will utilize clamshell design that allowed customers to recline while they tanned. The positive association tied to tanning, furthermore continues to hold strong in the national psyche. As a result, new products have emerged to alter one’s skin color safely which will be adopted by the salon. Most notably, self-tanning lotions and booths that spray a topical tanning product are popular and safe alternatives.
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