BCO313 NEGOTIATION MID-TERM ASSESSMENT Task brief & rubrics Dwyer 2021_2022 Task • • • Individual written Assignment Material: 1. Case titled ‘BARGAINING PRICE WITH THE CHINESE’ (Rob March) page 2 Answer ALL the following questions: 1. ‘He realized the value of thinking like one’s opponent — seeing things as they do.’ Explain what this means and give some examples to illustrate this view. 2. ‘The Chinese insisted that custom required the visitor—Glazer—to make the first presentation. This he did, even though he was accustomed to allowing his opponents to speak first’ What are the advantages and drawbacks of making the first offer? 3. ‘Glazer could hardly believe that he had lowered his price twenty per-cent that week’: What does this tell you about Glazer’s ZOPA? 4. What can we ‘assume’ about the way Glazer did his due diligence? Evaluate the approach. 5. Name three tactics the Chinese used in the second meeting. Evaluate briefly how Glazer dealt with them. 6. ‘Glazer remembered the tight deadlines he had faced on previous trips to China; now positions had been reversed, with the Chinese facing the pressures and deadlines.’: What does this tell you about Glazer’s preparation strategy for the negotiation? 7. ‘For the first time, the Chinese made a counter offer. Auger-Aiso accepted, and agreement was reached’ Why do you thing Auger Aiso agreed at this point? 8. ‘He believed that Auger-Aiso had been awarded the contract because it had been the preferred supplier right from the start’ How does this belief relate to understanding the difference between distributive and integrative bargaining? Supply a brief heading for each answer and use the Define-Exemplify-Reflect pattern wherever possible. Formalities: • • • • • • Wordcount: 1200-1800 words Cover, Table of Contents, References and Appendix are excluded from the total word count. Font: Arial 11 pts. Text alignment: Justified. The in-text References and the Bibliography have to be in the Harvard citation style. Format: PDF file Release date: Friday, 5th of November 2021, 00:00 CEST Submission: Deadline is November 6th 2021 at 23:59 CEST — Via Moodle (Turnitin) Weight: This task is 40% of your total grade for this subject. It assesses the following learning outcomes: • • • • • Outcome 1: Have an in-depth understanding of the keys to successful negotiation Outcome 2: Critically appreciate negotiation styles, strategies, and tactics Outcome 3: Identify and create alternative negotiation strategies and tactics (own and of the other party) Outcome 4: Understand and apply due diligence, briefing and debriefing Outcome 5: Evaluate the difference between distributive and integrative bargaining CASE STUDY: BARGAINING PRICE WITH THE CHINESE Overview K. G. Marwin Inc. developed a particular technology in the 1980s, called the Trilliamp Process, that the Chinese government sought to integrate into an ethylene facility in Lanzhou, the capital of Gansu province. It signed a contract with Marwin, which in 1985 invited inquiries from U.S. and Japanese manufacturers for production of the machinery. Marwin recommended the Japanese company Auger-Aiso as most capable of producing the turbines, while the Chinese invited two U.S. companies—Federal Electric and Pressure Inc., which manufactured through the large Japanese trading company Mitsubo—to compete for the multi-milliondollar contract. The Scene To undertake the negotiations with the three prospective suppliers, six Chinese officials and three representatives from the Bank of China were selected. The Auger-Aiso chief negotiator was Todman Glazer, the company’s Japan branch manager from the United States who resided in Tokyo and was assisted by his Japanese colleagues. Glazer remembered the tight deadlines he had faced on previous trips to China; now positions had been reversed, with the Chinese facing the pressures and deadlines. He realized the value of thinking like one’s opponent—seeing things as they do. This was the first potential deal with China in the ethylene market, and Auger-Aiso faced stiff competition from Mitsubo, which had already cornered the Chinese oil-processing market. At the first negotiation meeting in Beijing, the Chinese insisted that custom required the visitor—Glazer—to make the first presentation. This he did, even though he was accustomed to allowing his opponents to speak first. Glazer began by addressing the excellence of Auger-Aiso technology, explaining that the manufacturing would all be done in Japan to ensure product excellence. When the Chinese offered no indication of their position or price, Glazer felt obliged to quote an upper-range price that would allow flexibility. The Chinese still made no comment. In the afternoon, the Chinese heard offers from the combined Mitsubo-Pressure team, then Federal Electric. By the end of the day, Federal Electric had dropped out of the race, accepting that it could not compete. Revolving Doors, Changing Moods During the first week of negotiations, a pattern emerged. The Chinese would meet with Glazer and his colleagues in the morning and ask for a price, saying that their competitors had already bid such-and-such a price, which was invariably lower than the last Auger-Aiso bid. They would meet with Mitsubo-Pressure in the afternoon and use the same approach, causing the latter to drop its price. Moreover, each meeting would end with the Chinese saying, ‘We will call you tomorrow.’ But, because they never called, both prospective vendors became panicky and visited the Chinese office without notice to present an even lower bid. As the Chinese kept the vendors guessing and in the dark, Glazer understood how the Chinese had earned a reputation as master negotiators. At the second meeting, tactics changed and there were different people representing the Chinese side. An antagonist would suddenly burst out in loud Chinese and harangue the AugerAiso side for some fifteen minutes, complaining about the quality of the machines they were offering. A protagonist would then intervene and, apologizing for his colleague, would say he had been upset about the current situation. Glazer regarded these outbursts as no more than arranged role playing, designed to make the protagonist (the good guy) appear more trustworthy to the foreigners. But, Glazer realized, all the participants were play-acting. Then there was yet another change. The Chinese located the Auger-Aiso and Mitsubo-Pressure teams near the meeting room, in adjacent rooms. Mitsubo-Pressure would be called in and asked for its best price. After the team had returned to its room, AugerAiso would be called in, told the latest price, and asked if it could beat this. When the prospective vendors could drop their price no lower, they would add something to the package. Auger, for example, added oil gauges for its turbines, effectively a three-percent add-on. Even so, the Chinese still would not commit to placing an order. When the Price Is Right Glazer could hardly believe that he had lowered his price twenty per-cent that week; to do so would have been out of the question in the United States. On the final day, Auger-Aiso made another offer—and, for the first time, the Chinese made a counter offer. Auger-Aiso accepted, and agreement was reached. A few hours later, Mitsubo-Pres-sure came back with an even lower price, but the deal had already been struck. Glazer spoke later about how difficult it was to compete with Japanese trading companies, explaining that U.S. companies had so many factors to bear in mind, including insurance and a variety of liabilities. Meanwhile, Japanese trading companies, which had vastly different legal parameters [within which] to operate within, could more easily focus on getting contracts and closing deals. He believed that Auger-Aiso had been awarded the contract because it had been the preferred supplier right from the start. Rubrics Student follows the instructions and applies fully relevant knowledge from the topics delivered in the course. Good 80-89 Student demonstrates good understanding of the task and mentions some relevant concepts and demonstrates use of the relevant terminology. Student follows most instructions and applies mostly relevant knowledge from the topics delivered in the course. Critical Thinking (30%) Excellent critical assessment, drawing outstanding conclusions from relevant authors. Good critical assessment, drawing conclusions from relevant authors and references. Communication (20%) Student communicates ideas extremely clearly, respecting word count, grammar and spellcheck. Very well organized and easy to read. Student communicates ideas clearly, respecting word count, grammar and spellcheck. Well organized and easy to read. Knowledge & Understanding (20%) Application (30%) Exceptional 90-100 Student demonstrates excellent understanding of key concepts and uses terminology in an entirely appropriate manner. Fair 70-79 Student understands the task and provides minimum theory and/or some use of terminology. Student follows the instructions minimally and applies some relevant knowledge from the topics delivered in the course. Misunderstanding may be evident. Student provides some insights but stays on the surface of the topic. References may not be relevant. Student communicates ideas with some clarity. The text may be slightly over or under the word count requested. Some misspelling errors may be evident. Acceptable organizion of ideas and mostly easy to read. Marginal fail 60-69 Student understands the task and attempts to answer the questions but does not mention key concepts or uses minimum amount of relevant terminology. Student does not always follow the instructions and applies little relevant knowledge from the topics delivered in the course. Misunderstandings are evident. Student makes little or none critical thinking insights, does not quote appropriate authors, and does not provide valid sources. Student communicates ideas in a somewhat unclear manner. Well over or under the word count requested and misspelling errors are evident. Organizion of ideas needs improvement; not always easy to read. 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