Negotiation Strategy: Shell, Greenpeace, and Lego Companies - Term Paper Example

Negotiation strategy: A case of Shell, Greenpeace and Lego Companies Name Course Tutor Date Introduction The modern corporate world has grown and become more complex because of the process of diversification and globalization processes. When a business firm expands, it faces new challenges and issues related to things like legal liabilities, increased regulation, more accountability, technological advancement pressure of the environmental changes and many more. Therefore, a small organization faces fewer challenges as compared to a large organization (Wittman, 2009, pp591). This implies that when a firm grows and becomes big, it encounters so many issues that ought to be solved strategically for it to achieve its goals. One of the ways that are used to solve the emerging challenges is negotiation (Stitt, 2003, pp11). It is a dialogue process between the conflicting parties intended to reach an understanding through resolving their points of differences and craft outcomes to satisfy various interests. Before negotiation, there must be an issue or a dispute between parties where each party has different interests but they have to agree first before the situation normalizes. This paper majorly focuses on the issues in the corporate world and the negotiation strategies that are used to reach the agreements. The paper will be all about the current dispute that emerged between three companies, Shell, Greenpeace and Lego companies. It will show different interests of these three companies, devise negotiations strategies for each of the parties, show the major components of the dispute and also show the rationale to support the recommended negotiation strategies. Disputing parties Shell is one of the leading multinational companies that drills oil, process and sell various products to the world market. It has been in business for good lengths of time that is why it has diversified (Vaughan, 2014, pp1). Greenpeace Company is a non-governmental organization firm that strongly advocates for environmental conservation. It encourages other business firms to go green it their operations. This means that they should operate their businesses in a cautious manner so that the preserve the natural setting of the environment (Sullivan, 2014, pp1). Dispute background One of the emerging issues that have caused a dispute among these three companies is that Greenpeace Company advocates environmental conservation. However, Shell Company being one of the biggest oil producers is known for oil spillage (Vaughan, 2014, pp1). This company is planning to start drilling oil in the arctic regions mainly in Russia and the neighboring nations. Therefore, fears emerged in this arctic region that Shell would cause a big environmental damage through oil spillage. Oil spillage is among the biggest known polluter of the environment; therefore, if Shell Company were allowed to do so, there would be a great environmental pollution (Vaughan, 2014, pp1). Greenpeace was against the issue of oil drilling in the arctic region because of the risks of oil spillage by Shell’s operation. To discourage shell from operating this business in this region, Greenpeace approached Lego Company a toy-making company that had signed a marketing contract with Shell Company (Sullivan, 2014, pp1). They had signed a contract where Lego’s products were sold in Shell’s petrol stations while Shell Logos were put on the Lego’s toys. This was a multi-million dollars business deal. However, Green peace’s efforts to discourage Shell from drilling oil in the arctic approached Lego Company to cut ties with this oil drilling Company. It was a condition that if Shell still wants to trade with Lego, it had to abandon this idea of drilling oil in the arctic region. At first, Lego was reluctant to the Green peace’s proposal because of the mutual benefit it had with Shell Company. Green peace became aggressive with the campaign against this act of oil drilling by Shell Company. It posted millions of pictures and videos on YouTube showing how the region would be depleted by oil spillage in future (Neil Katz, 2008, pp4). This raised a concern even more groups and people discussed the matter. Lego tried to distance itself from the Green peace’s views by it later bowed down to pressure. The Chief executive officer of Lego finally has recently announced that Lego will not renew its contract with Shell once the current one expires. Lego’s announcement made it harder for Shell Company to avoid negative publicity in the arctic region (Sullivan, 2014, pp1). Situation analysis The main issue why Greenpeace Company opened a campaign against Shell operation in the arctic region is because of its bad the historical records. Shell Company is an old company, and its records show that wherever it has been in operation, it left a negative mark on the environment in terms of oil spillage (Vaughan, 2014, pp1). Since Greenpeace Company is a non-profit making company and protecting the environment, it collected signatures from the stakeholders who supported the campaign of conserving the environment (Vaughan, 2014, pp1). The main reason Green peace decided to use Lego to counter Shell Company is because of the long-term relationship these two companies have had. Therefore, Greenpeace questioned Lego that why is that it is associating with Shell Company a company that is known for its environmental pollution and yet Lego always boasts of its green credentials (Miller, 2014, pp1). Greenpeace argued that Lego should reconsider its relationship with Shell to protect its image since it is one of the high-repudiated companies over conservation of the environment. Lego’s operations protect the environment, the toys it manufactures in most cases; the materials it uses to manufacture these toys are recycled waste materials. Recycling of waste materials is one way of conserving the environment Neil H. Katz (2008), This is why Lego earned respect from the community for its mission of conserving the environment. In real sense, both Shell and Greenpeace enjoyed their collaboration this is why they have worked together for a long period. However, Lego was compelled to cut the relationship with Shell just because of the protecting its social image (Miller, 2014, pp1). This is why at first; it argued that it would be better if Greenpeace would directly deal with Shell without including Lego in this case (O’Reilly, 2014, pp3). Using another company to counteract another company is one of the common ways companies compete in the market (Miller, 2014, pp1). The underlying fact is that there existed other energy drilling companies operating in the arctic region, but Greenpeace only focused to discourage Shell from commencing its operations in this region. This case is a good example to the management of any company on how activism can trump a once thriving business. This may mean that the size, history or financial base can sometimes be helpless when certain situation faces a firm. Shell Company had all it takes, but it failed to secure a chance in arctic because of the activism from the external forces. In the modern world, it is required that business firms operate ethically (Miller, 2014, pp1). Operating ethically is carrying out business in a responsible manner where the firm has the responsibility of taking care of the environment in which it is operating. Therefore, ethics is one of the subjects that is defining the business operation in the modern world (Vaughan, 2014, pp1). Positions current held by each party Lego Company Lego group reaction to the campaign by Greenpeace against Shell was that it is determined to leave a positive impact on the society and the planet so that the future generation that would inherit the earth would find it in its natural state (Vaughan, 2014, pp1). Lego boasted that it operate responsibly and will always adhere to its motto 0f the company that has been in existence since 1932. Lego believes in collaborating with other firms to reach as many consumers as possible. It expected Shell also to live up to its responsibilities wherever it operates and take necessary actions to any potential claim (Miller, 2014, pp1). Lego had the intentions of living up to a long-term relationship with Shell, but the conditions are not allowing. When Greenpeace started its campaign against Shell, The chief executive officer of Lego Jorgen Vig Knudstorp said the matter belonged to Shell and Greenpeace. He expressed regrets that the use of Lego’s brands is in the dispute (Miller, 2014, pp1). These statements show that Lego Company did not want to be part of the dispute between Shell and Greenpeace. However, it was forced into the matter when the campaigners used its brand. He stated clearly, “We do not want to be part of Green peace’s campaign. (Miller, 2014, pp1). He continues and says that while Lego has said that this matter is for Shell and Greenpeace, business is critical. All business partnerships should be aligned with the firm’s purpose, values and ethical standards. Therefore, Lego did not intend to cut its relationship with Shell but for the sake of its public image, it is compelled to do so (Miller, 2014, pp1). From Lego’s viewpoint, Greenpeace could directly deal with shell instead of tracking it into this dispute. However, Lego will not renew the contract it signed with Shell Company in 2011 once it expires to save its reputation. Greenpeace Company Green peace’s argument about this issue is that Shell should not drill oil in the arctic countries because it would harm the environment. It arguments are because Shell history shows that whoever it has been operation; it has polluted the environment through oil spillage (O’Reilly, 2014, pp3). Greenpeace fears the dangers that the wildlife would be exposed to and the irretrievable damage to the ecosystem at large when Shell is allowed to drill oil in this region (Vaughan, 2014, pp1). it is necessary to prevent it from extending these operations to this arctic region. Greenpeace advocates for environmental protection, therefore, any company should have the responsibility of conserving the environment. Greenpeace challenges Shell to prove that its operations would not lead to pollution when its history shows very well that it has largely contributed to environmental pollution. Greenpeace saw that to counteract Shell properly; it had to pressurize Lego to cut its long-term ties (Miller, 2014, pp1). The communication experts congratulate Lego Company in exiting the partnership with Shell since there was no other way out. Shell Company The campaign against Shell found it unprepared and with a surprise. Shell could not imagine that its long-term partnership with Lego could be compromised. From Shell’s point of view, the campaign against it was not based on the issue of environmental pollution but it is more of political interests of the competitors and other stakeholders in the arctic region. Shell argues that there already other firms exploring oil in this region (Vaughan, 2014, pp1). Therefore, preventing it from accessing these areas on the reason of environmental pollution is a vague and selfish reason. Shell understands that those companies in this parts fears competition that would emerge when it open its operations (O’Reilly, 2014, pp3). In its defends, Shell argues that it operates and has been operating responsibly in the arctic and other parents. In fact, it takes the issue of protection of the environment very seriously in its operations (Miller, 2014, pp1). On this campaign, Shell has been adamant because is a very technical issue that ought to be approached with a lot of care. Shell seems defenseless since its partner Lego has bowed to the public pressure and there nothing Shell can do to salvage the situation. The current perceived choice of Shell Company over this particular dispute is that it would have to continue with its plans of drilling oil in the arctic regions. This is because it does not see any valid reasons why Greenpeace is against it (Vaughan, 2014, pp1). If it is about the environmental pollution, which Greenpeace is claiming to be the main reason, Shell has acted responsibly since its initiation and it take the issues of environmental protection seriously (Miller, 2014, pp1). A poster showing major components of the dispute resolution strategies. Parties Demands Best Alternatives Green peace -No drilling of oil in the arctic region by Shell Company -Lego must terminate its marketing contract with Shell to save its public image and to live to its principles -Strategic approach of dispute resolution Shell Company -Plans to drill oil in the arctic will continue regardless of the campaigns by Greenpeace movement -Lego should reconsider its stand of terminating its contract since the campaigns are based on the vague reasons -Structural approach of dispute resolution Lego Company -The company will not renew its contract with Shell once it expires to save its reputation. -The company could not be included in this dispute because it concerns Greenpeace and Shell company alone. -Integrative approach of dispute resolution A). Negotiating strategy memo for Shell Company To : Greenpeace and Lego Company From: Shell Company Date: 20 October 2014 1. The problem As a company that has been in operation of oil drilling business for many years, we do not welcome the call of not expanding our business of drilling oil deposits in the arctic region. Our refusal to your demands is because we are a responsible company that has enough experience of our work that is why we have been able to thrive for all this time (Vaughan, 2014, PP1). As a multinational company, we believe in integrity and respect of our ethical codes of conduct. Our operations have been safe to the environment, and we have done our best to ensure this. Therefore, the company’s stand is that it will have to continue with its plans to drill oil in the arctic regions despite of the ongoing campaign since they are not based on the tangible reasons (Vaughan, 2014, PP1). 2. Our goals and principles a) Shell Company has a goal of drilling and processing of oil deposits and comes up with products that would serve the consumers satisfactory. b) In its operation, Shell Company has a goal of carrying out a drilling and processing exercise in a safe way without causing environmental harm. c) Shell is committed to maintaining a good relationship with its partners; this is because collaboration practice is the one that has elevated this company to be a famous company in this industry. d) Shell Company believes that competition within the industries and markets make the companies in operations to be more effective and attai8n growth. Therefore, the company fears neither competition nor unnecessary pressures and conditions from external forces. e) The company believes in negotiation as a dispute resolution approach. 3. Diagnosis of the situation Following of the current situation, the company indeed is already experiencing problems because of the campaigns raised against it. The organizations reputation is in question because of false allegations (Vaughan, 2014, PP1). Our mutual relationship with our partner Lego has been compromised, and this has affected the sales of both of us. As per now, the company cannot afford to cancel its drillings plans because of mere allegations. There is no fear, Lego may not renew the contract but the plans of drilling the oil deposits in the proposed regions will continue. The Company has consulted the US authorities to find out good plans on how to execute its plans (Vaughan, 2014, PP1). 4. Recommended strategy and tactics Shell Company advocates structural approach in resolving this dispute. We prefer this approach of negotiations because it would define the outcomes in patterns of relationships between our parties and our goals (Chow, Kong & Cheung, 2012, pp2). This approach is appropriate since it define the negotiation as a conflict scenario between opponents who tend to maintain incompatible goals. 5. Possible objections and risks Shell Company has decided to seek permission from the government authorities, and when given the okay, it will continue with the plans. Therefore, the opponents should only come up with credible reasons and explanations on how the company should carry out the drilling exercise (Vaughan, 2014, PP1). However, coming with a proposal that Shell Company should not drill oil in the arctic region will unacceptable. B). Negotiating strategy memo for Lego Company To : Greenpeace and Shell Company From: Lego Company Date: 20 October 2014 1. The problem As a company that know all over the world for toy-making brands, it is with deep regret we have decided not to renew the contract we had signed with our long-term company Shell for the well being of our company’s reputation. We have had a mutual collaboration with Shell Company for over fifty years and our partnership indeed has been fruitful (Sullivan, Tom, 2014, pp1). As a multinational company, we consider, and we have considered working with integrity to achieve the satisfaction of our customers. Lego Company prefers working in an environmental that is free of stress and restrictions. We do not leave anything for granted in case there is a public claim that can ruin our hard earned reputation for the years we have been in business (Vaughan, 2014, PP1). Therefore, it is not the companies wish to cut ties with our partner Shell Company but it is because we like observing public interests. However, if there will be a fruitful negation, Lego Company will be happy to renew its contract with its long-term partner. 2. Our goals and principles Lego Company has its goals and principles like any other company. First, we believe living up to our code of ethics. The company strives to conserve the environment for the future generation. This is why most of the products that we produce are environment-friendly. This why we cannot be reluctant and silent when the concerns of the environment are raised (Sullivan, Tom, 2014, pp1). Secondly, Lego believes in negotiation as a conflict resolution strategy. Lego also advocates credible arguments; the company is not ready to be coerced to accept certain conditions that have not claims (Sullivan, Tom, 2014, pp1). In case the company learns that the reasons given to force it cut its cordial relationship with its partner are vague, then it will reconsider its stand over the entire issue. 3. Diagnosis of the situation Following the prevailing situation, the campaign held against Shell by Greenpeace; Lego Company is already experiencing challenges. The company’s sales have gone down it means that we have started losing customers already because of the announcement that we are disengaging with Shell soon (Vaughan, 2014, PP1). As much as the company is yielding to the public pressure, it also considers the loose of customers and the low volume of sales that it has started experienced in the recent days. Therefore, Greenpeace should be bold and come clean over this issue. The company may take a legal action against Greenpeace Company in case it realizes beyond reasonable doubt that Greenpeace had other reasons a part from what it stated as a the basis of campaigning against Shell. It is because the campaign has affected its operations. 4. Recommended strategy and tactics Lego Company prefers to engage in negotiations that would lead to the finding of the solution of this dispute. The best negotiation strategy is using an integrative approach. This strategy use objective criteria to create conditions for mutual benefit. An approach calls for parties to the disputes to come together and work jointly to create a win-win solution (Chow, Kong& Cheung, 2012, pp2). This means that Greenpeace and Shell Company should come together and discuss in details their interests. Greenpeace should just be open and tell Shell what it requires in case it pollutes the environment. Lego should be left alone in this matter because it has no interests it in. 5. Possible objections and risks Lego Company has decided not to renew the contract it signed with Shell Company unless the matter is solved through negotiation. The company has decided even to incur losses, but not to do business with a firm that has compromising issues. Lego Company is ready to protect its image and walk the talk according to its ethical standards (Vaughan, 2014, PP1). Lego Company is ready to support any campaign that is aimed at conserving the environment. Finally, Lego Company is not interested to be pulled in other companies matters. It is a company of integrity and wishes to do business with other partners with mutual respect. b). Negotiating strategy memo for Greenpeace Company To : Lego and Shell Company From: Greenpeace Company Date: 20 October 2014 1. The problem Greenpeace is an environmental movement that advocates and supports the issues of conservation of the environment. Greenpeace as it is a small movement compared to Lego and Shell companies; it is quite vocal when it comes to environmental matters. Its function is to ensure that operating firms must adhere to the rules of taking care of the ecosystem (Sullivan, 2014, pp1). The operation of any firm should not harm the surroundings with its habitat. However, the historical records of Shell Company have shown that Shell is among the major causes of environmental pollution. Therefore, Greenpeace rose to the occasion to prevent this polluter to establish its business in Arctic region (Chow, Kong& Cheung, 2012, pp2). Greenpeace would not leave anything by chance to allow this foreign oil company to come and destruct the serene environment the arctic region is enjoying with oil spillage and other pollutions. It will stage its campaigns against this move until Shell Company shelves this plan. It will compel Lego Company to cut its links with Shell Company (Vaughan, 2014, PP1). Lego Company in this dispute would act like a victim of circumstance because it has nothing to do but to surrender to save its public image. 2. Our goals and principles Green-peace’s main goal is to maintain a natural environment so that the future generation can also have a better place to stay. Therefore, a firm or anybody who disturbs the natural environment is a great enemy of Greenpeace. One of the principles of Greenpeace is to act without fear or favor; it is ready to face any company that tends to go against the rules that concerns the environment (Alfredson, &Azeta, 2008). Greenpeace is committed to acting in an integrity manner; our actions are not tied to other selfish interests. The company is ready spending any amount and effort to save the environment from the hands of the polluters. 3. Diagnosis of the situation The prevailing situation is tough to Shell and Lego Company. Greenpeace has posted millions of videos on YouTube and millions of people have seen these videos. The videos describe how arctic region would look like may look like when Shell is allowed to drill oil (Sullivan, 2014, pp1). It is a painful situation for the two multinational companies that have been in partnership for over half a century to disengage. However, a company such Lego has no option other than wielding to the pressure of Greenpeace and that of public for it to be able to continue its operation and keep the promise that it supports the issue of environmental conservation. Shell on the hand is living in denial; it does not believe that it is being separated by its lifelong partner and would not be able to drill oil in this region. It is still optimistic that it would be able to explore oil in this region. 4. Recommended strategy and tactics Greenpeace is determined to stop Shell from exploiting oil in the arctic region. It will Compel Lego Company to terminate its business with Shell company to discourage Shell from executing its plans. In case of negotiation, Greenpeace prefers to adopt a strategic approach in negotiating for a solution in this dispute. This approach has its roots in the mathematics, decision and rational decision theory. This approach focuses on the outcome of the negotiation alone (Alfredson, &Azeta, 2008). Therefore, during this negotiation approach, Greenpeace may reach a resolution if Shell Company accepts to pay for the pollution it causes to the environment. Lego will only be allowed to trade with Shell only if Shell has accepted the terms and conditions. 5. Possible objections and risks The possible objection for Greenpeace is to stop completely Shell from establishment of its operations in this region. Another option, which Greenpeace may resort on, is to allow Shell Company to drill oil on condition that it accepts to pay for the pollution it causes to the environment. It is one of the strategies that is used by many governments where calculations are done to estimate how much the company has affected the environment and pays the amount commensurate to the magnitude of the damage it has caused (Alfredson, &Azeta, 2008). This option can only be resorted to when Shell agrees that it would take extra care in its operations. It will also work if it is agreed that Greenpeace and other environmental movements would be carrying out regular checks to estimate how much Shell is interfering with the environment. A rationale to support the recommended strategies The three parties to the dispute have agreed that they are ready to engage in a meaningful negotiation process in case each party is ready to adjust its stands. Greenpeace prefers to use a strategic approach as a negotiation strategy (Sullivan, T, 2014, pp1). This is where the problem is an analysis and calculated mathematically to act according to the figures. It suggests that the only best way Shell can enter Arctic; it must assure that it will meet all the costs related to environmental pollution caused by its operations. This strategy would be a challenge to Shell in case the parties resort to it. Shell, on the other hand, prefers structural approach in that it has to convince its opponent Greenpeace because the approach would define the outcome in relation to its goals. If it manages to push this strategy, then it would have reduced the risks that it may encounter when it commences its operations. Lego on the other hand advocates for an integrative approach as a strategy for dispute resolution in this case. An integrative approach encourages the contending parties to adjust their strands and blend their desires to reach a common resolution where each part would have a mutual benefit (Alfredson, &Azeta, 2008). From the Lego’s point of view, Greenpeace should just face Shell Company and define the amount it wants it to pay for the environmental pollution costs instead of using indirect means which has affected its business and the mutual relationship with the Shell Company. The best strategy that can work in resolving this dispute is this of integrative suggested by Lego Company. It will ensure that both parties benefit mutual and would set the limits of pollution, which ought not to be surpassed by Shell Company (Alfredson, &Azeta, 2008). Conclusion The management exercise in the modern corporate world has taken a new dimension. This is because firms are now diversifying their businesses; they are involved in many legal processes, and they deal with different kinds of stakeholders. Therefore, it is obvious that the chances of dispute occurrences are very high. Therefore, the managers should be acquainted with the necessary knowledge to deal with any dispute that may emerge. Every manager should have a conflict resolution and crisis management. The managers should be in a position to save the situation. In reference to the discussed situation, both Shell and Lego Companies reached a dilemma whether to accept the crisis or counter the situation directly. If they have excellent managers, these two companies will have to continue working together because the dispute would be resolved in a more coherent manner. It implies that crises are inevitable in any given organization. References Alfredson, T &Azeta, C. (2008). Negotiation theory and practice: A review of the literature. Accessed 20 October 2014. 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