Week 9 Negotiation
Negotiation Week 9 (Final night)
MedLee: In Pursuit of a Healthy Joint Venture
My Role: T.S. Lee, V.P. Lee Medical Supply
Reaction:
The negotiation started distinctly different from previous ones. I spent a little more time in pre-negotiation dialogue, some more small talk, than done previously. I believe it was done so as to feed off the positive feelings from our respective bosses encounter during their vacation at the resort on Phuket Island. I asked my counterpart, Melissa Ryan, if she had ever been to Thailand and if she is familiar with the Thai culture. This helped me understand a little about how wide the cultural gap was between us and how much ground I would have to make up to bridge that gap, and to gauge the level of willingness to understand the culture and try to accommodate this aspect in decision-making. She was very willing to listen and understand the culture and this help me believe that maybe the negotiation would work, although I still had some reservations, as I believed most of our interests did not overlap.
As we progressed though the negotiation we did it is a structured was, dealing with each of the four key negotiation issues: decision-making, staffing, profit distribution and conflict resolution mechanism.
We started with the issue of staffing, then decision-making, profit distribution then conflict resolution.
When we discussed staffing, I was pleasantly surprised that she wanted most of the staff to be Thai. I thought that she would have wanted more of the staff to be American or at least have the staff be equally divided among Americans and Thai. This was a very good indication that we would be able to come to an agreement. Now I had some hope that this would not be a “no-deal” agreement. However this was just the first hurdle, there were still more yet to come.
We then discussed who would comprise the staff. She indicated that she would want to avoid nepotism, and wanted fairness in hiring to be promoted. I indicated that our interests were different. My father wanted family members running the business because he wanted workers he could both trust and who would not challenge his authority. I believed that we were worlds apart in this issue. To reduce some of the importance placed on nepotism, I indicated that I had asked a Thai friend and he told me that nearly half of the businesses in Thailand were family-run. So, within the culture, having a family-run joint venture in Thailand would not be a problem. This help to ease the problem somewhat. After some discussion we decided that we would try to avoid nepotism as much as possible. We would try to hire non-family Thai’s but they must be people who can not only perform better than family but must also be trustworthy (as determined by Mr. Lee).
Concerning decision-making, we agreed that there should be a board. However what we could not agree to was the proportion of MedDevice to Lee Medical appointments to the Board. Again I indicated, by using one of the standards, that sometimes, even though a US company may be a majority financier to a joint venture, the Thai counterpart can have a majority stake in the venture.
According to this site http://www.buyusa.gov/thailand/en/treatyofamity.html it states that “Some US businesses still choose to form joint ventures with Thai partners and allow them to hold the majority stake because of their familiarity with the Thai economy and local regulations”.
This helped to diffuse any potential wrangling concerning how many of each company would make up the board. She wanted 3 MedDevice to 2 Lee Medical. I wanted it to be equal. We finally decided that we would rotate chairpersons on the Board every year between MedDevice and Lee Medical and we would let Mr. Lee and Mr. Thompson decide on the composition of the Board.
So it seemed that the interplay of use of standards and leaving the biggest decision to the owners helped move the negotiation forward. We recognized that this was a preliminary negotiation and possibly there may be future negotiation to firm up more difficult and substantive issues.
The next two issues were relative easier to negotiate. Concerning profit distribution, we toyed with ideas of making it 60:40 or 50:50. We left that decision to the owners as we both had very good reasons why it should be one or the other. My counterpart did not want to add the facility of withdrawals of profits until the 5 year period of the venture was up. However we agreed that we would allow it but a cap on the amount that can be withdrawn will be placed and that would be dependent on the profitability of the venture. The decision on the value of the cap would be made at a later date if or when revenues and profits are realized.
When we had reached this point, I was certain that we would reach agreement on the last issue. I was happy that my counterpart was willing to explore options, listen to suggestions, but she was strong and made decisions based on the merits of the arguments presented.
On the last issue she wanted to incorporate the company in California. I didn’t know what this meant, and told her that, but I went along with it. I did indicate that according to Thai culture, they are notorious for avoiding conflict. I thought that bringing the courts into conflict resolution process would be something we would want to avert. We agreed that it would be a last resort, and be used only in extreme circumstances. Normally we would use Mr. Lee and Mr. Thompson as the final arbiters of justice.
My counterpart was very smooth, mature and calm. I think that helped to make the negotiation to be very effective. If she was only thinking about satisfying her interests then I believe the negotiation would have been much more difficult and tense.
So thus we finished the negotiation. We were both very satisfied with the outcome. All was well and we shook hands to ratify the decisions.
Feedback received and given:
1. I was told that I was well prepared and helped by bring a lot of information from outside sources. I was also told that there was no area that I needed to improve in. Now that was a first. She told me that she would not mind negotiating with me again.
2. I told her that she was well prepared, very positive and willing to explore options, willing to listen and willing to find solutions that would satisfy both parties. I could think of no area that she needed to improve. She was very professional and I would not mind negotiating with her again.
Observations of how others were negotiating:
1. I observed that only one pair of negotiators obtained a no-deal result. This was an indication that there must have been collaborative problem solving in the other negotiations. The barrier in this case was corporate cultural differences that could have been an obstacle to arriving at mutually agreeable solution. It seemed as though most of the negotiations were able to bypass this issue and still work together to attempt to form a successful joint venture.
Thoughts on how to improve next negotiation:
The negotiation went very smoothly. However, I would take a break nevertheless in a future negotiation even when it is going smoothly just to get my bearings and to refocus. Maybe a better result from a seemingly good discussion could be obtained, or maybe I could be jolted from my false sense of security and wake up to realize that I am yielding too much to the other side.
Key learning(s) from the class:
1. Good to be open minded and not be positional or the negotiation would not go anywhere especially in this case.
2. We did not need a break in this negotiation because it went so smoothly but sometimes it is still good to take a break to ensure you are not too yielding and to get a sense of where the negotiation is going so you would not regret the decisions you are making.
3. Objective criteria and standards help to move the negotiation forward and remove potential barriers to communication and decision-making.
4. Lack of apparent overlapping interests should not be a barrier to obtaining solutions. One should go into the negotiation trying to find overlap before declaring that there is none and aborting the negotiation.
5. There is the need to be open and honest in discussion and not hide information or the relationship would be hurt which could be detrimental in the case since it is a joint venture agreement which needs to be “on the level” at all times for it to work properly.
Applications of course content to everyday life:
1. The cultural aspects of this negotiation are especially real in America as it is a “melting pot” of people of diverse cultures and backgrounds. There are even subcultures within cultures. So it is important to a negotiation with someone to understand a little about their backgrounds, histories and experiences beforehand. This will help to determine possibly what their interests are and will give you a better basis for preparation and strategy for the negotiation.
Notes and comments from the readings:
The reading entitled “The Chinese Negotiation” by John L. Graham and N. Mark Lam it is instructive that when two opposing cultures are negotiating, both sides should learn, understand and respect the opposing styles and processes of negotiation. In order to do this, understanding of the national history, culture, tradition and religion are very important. If one side does their homework in this respect but the other side does not, then long-term relationships would be strained and most likely, not sustainable. It seems that Americans and Chinese have diverse historical and social roots and this comes to play in their thinking, behaviors and actions in negotiations. American negotiators would be better able to negotiate with Chinese negotiators if they would adopt the Chinese way of negotiation. Connections with socially mobile people, respect, honor, friendliness, stamina, patience, are some of the ingredients of forming successful partnerships. Friendships and relationship should be nurtured for long-term business success.
MedLee: In Pursuit of a Healthy Joint Venture
My Role: T.S. Lee, V.P. Lee Medical Supply
Reaction:
The negotiation started distinctly different from previous ones. I spent a little more time in pre-negotiation dialogue, some more small talk, than done previously. I believe it was done so as to feed off the positive feelings from our respective bosses encounter during their vacation at the resort on Phuket Island. I asked my counterpart, Melissa Ryan, if she had ever been to Thailand and if she is familiar with the Thai culture. This helped me understand a little about how wide the cultural gap was between us and how much ground I would have to make up to bridge that gap, and to gauge the level of willingness to understand the culture and try to accommodate this aspect in decision-making. She was very willing to listen and understand the culture and this help me believe that maybe the negotiation would work, although I still had some reservations, as I believed most of our interests did not overlap.
As we progressed though the negotiation we did it is a structured was, dealing with each of the four key negotiation issues: decision-making, staffing, profit distribution and conflict resolution mechanism.
We started with the issue of staffing, then decision-making, profit distribution then conflict resolution.
When we discussed staffing, I was pleasantly surprised that she wanted most of the staff to be Thai. I thought that she would have wanted more of the staff to be American or at least have the staff be equally divided among Americans and Thai. This was a very good indication that we would be able to come to an agreement. Now I had some hope that this would not be a “no-deal” agreement. However this was just the first hurdle, there were still more yet to come.
We then discussed who would comprise the staff. She indicated that she would want to avoid nepotism, and wanted fairness in hiring to be promoted. I indicated that our interests were different. My father wanted family members running the business because he wanted workers he could both trust and who would not challenge his authority. I believed that we were worlds apart in this issue. To reduce some of the importance placed on nepotism, I indicated that I had asked a Thai friend and he told me that nearly half of the businesses in Thailand were family-run. So, within the culture, having a family-run joint venture in Thailand would not be a problem. This help to ease the problem somewhat. After some discussion we decided that we would try to avoid nepotism as much as possible. We would try to hire non-family Thai’s but they must be people who can not only perform better than family but must also be trustworthy (as determined by Mr. Lee).
Concerning decision-making, we agreed that there should be a board. However what we could not agree to was the proportion of MedDevice to Lee Medical appointments to the Board. Again I indicated, by using one of the standards, that sometimes, even though a US company may be a majority financier to a joint venture, the Thai counterpart can have a majority stake in the venture.
According to this site http://www.buyusa.gov/thailand/en/treatyofamity.html it states that “Some US businesses still choose to form joint ventures with Thai partners and allow them to hold the majority stake because of their familiarity with the Thai economy and local regulations”.
This helped to diffuse any potential wrangling concerning how many of each company would make up the board. She wanted 3 MedDevice to 2 Lee Medical. I wanted it to be equal. We finally decided that we would rotate chairpersons on the Board every year between MedDevice and Lee Medical and we would let Mr. Lee and Mr. Thompson decide on the composition of the Board.
So it seemed that the interplay of use of standards and leaving the biggest decision to the owners helped move the negotiation forward. We recognized that this was a preliminary negotiation and possibly there may be future negotiation to firm up more difficult and substantive issues.
The next two issues were relative easier to negotiate. Concerning profit distribution, we toyed with ideas of making it 60:40 or 50:50. We left that decision to the owners as we both had very good reasons why it should be one or the other. My counterpart did not want to add the facility of withdrawals of profits until the 5 year period of the venture was up. However we agreed that we would allow it but a cap on the amount that can be withdrawn will be placed and that would be dependent on the profitability of the venture. The decision on the value of the cap would be made at a later date if or when revenues and profits are realized.
When we had reached this point, I was certain that we would reach agreement on the last issue. I was happy that my counterpart was willing to explore options, listen to suggestions, but she was strong and made decisions based on the merits of the arguments presented.
On the last issue she wanted to incorporate the company in California. I didn’t know what this meant, and told her that, but I went along with it. I did indicate that according to Thai culture, they are notorious for avoiding conflict. I thought that bringing the courts into conflict resolution process would be something we would want to avert. We agreed that it would be a last resort, and be used only in extreme circumstances. Normally we would use Mr. Lee and Mr. Thompson as the final arbiters of justice.
My counterpart was very smooth, mature and calm. I think that helped to make the negotiation to be very effective. If she was only thinking about satisfying her interests then I believe the negotiation would have been much more difficult and tense.
So thus we finished the negotiation. We were both very satisfied with the outcome. All was well and we shook hands to ratify the decisions.
Feedback received and given:
1. I was told that I was well prepared and helped by bring a lot of information from outside sources. I was also told that there was no area that I needed to improve in. Now that was a first. She told me that she would not mind negotiating with me again.
2. I told her that she was well prepared, very positive and willing to explore options, willing to listen and willing to find solutions that would satisfy both parties. I could think of no area that she needed to improve. She was very professional and I would not mind negotiating with her again.
Observations of how others were negotiating:
1. I observed that only one pair of negotiators obtained a no-deal result. This was an indication that there must have been collaborative problem solving in the other negotiations. The barrier in this case was corporate cultural differences that could have been an obstacle to arriving at mutually agreeable solution. It seemed as though most of the negotiations were able to bypass this issue and still work together to attempt to form a successful joint venture.
Thoughts on how to improve next negotiation:
The negotiation went very smoothly. However, I would take a break nevertheless in a future negotiation even when it is going smoothly just to get my bearings and to refocus. Maybe a better result from a seemingly good discussion could be obtained, or maybe I could be jolted from my false sense of security and wake up to realize that I am yielding too much to the other side.
Key learning(s) from the class:
1. Good to be open minded and not be positional or the negotiation would not go anywhere especially in this case.
2. We did not need a break in this negotiation because it went so smoothly but sometimes it is still good to take a break to ensure you are not too yielding and to get a sense of where the negotiation is going so you would not regret the decisions you are making.
3. Objective criteria and standards help to move the negotiation forward and remove potential barriers to communication and decision-making.
4. Lack of apparent overlapping interests should not be a barrier to obtaining solutions. One should go into the negotiation trying to find overlap before declaring that there is none and aborting the negotiation.
5. There is the need to be open and honest in discussion and not hide information or the relationship would be hurt which could be detrimental in the case since it is a joint venture agreement which needs to be “on the level” at all times for it to work properly.
Applications of course content to everyday life:
1. The cultural aspects of this negotiation are especially real in America as it is a “melting pot” of people of diverse cultures and backgrounds. There are even subcultures within cultures. So it is important to a negotiation with someone to understand a little about their backgrounds, histories and experiences beforehand. This will help to determine possibly what their interests are and will give you a better basis for preparation and strategy for the negotiation.
Notes and comments from the readings:
The reading entitled “The Chinese Negotiation” by John L. Graham and N. Mark Lam it is instructive that when two opposing cultures are negotiating, both sides should learn, understand and respect the opposing styles and processes of negotiation. In order to do this, understanding of the national history, culture, tradition and religion are very important. If one side does their homework in this respect but the other side does not, then long-term relationships would be strained and most likely, not sustainable. It seems that Americans and Chinese have diverse historical and social roots and this comes to play in their thinking, behaviors and actions in negotiations. American negotiators would be better able to negotiate with Chinese negotiators if they would adopt the Chinese way of negotiation. Connections with socially mobile people, respect, honor, friendliness, stamina, patience, are some of the ingredients of forming successful partnerships. Friendships and relationship should be nurtured for long-term business success.