Type of Negotiations Recommended to Pursue with Red Star Holdings - Assignment Example

Negotiation- Case Study Name: Lecturer: Course: Date: Q1. Type of negotiations recommended for Matt to pursue with Red Star Holdings. Matt should use distributive negotiation to pursue negotiation with Red Star Holdings. To assist Matt to understand how culture potentially affects negotiation, certain elements of negotiation rooted in the Western theory should be examined. Among these elements, include direct confrontation. Additional elements comprise the forms of negotiations, whether transactional (between sellers and buyers) or resolution of disputes. Such forms of negotiations may have two likely agreement outcomes, mainly distributive negotiation or, integrative negotiation. Matt should be advised to pursue distributive negotiation (Lewicki et al. 2007). Matt already has established a manufacturing base in Australia, and only wants to source fabrics from a Chinese supplier. On the other hand, while “Red Star Holdings” are the exclusive importers/ producers of rare fabric that enables his clothes to repel food and ink stains, it also seeks to establish certain brand in Australia since they have no customer base in Australia. There is a possibility of the two dividing their resources. In the distributive negotiation, a possible deal would see Matt negotiate to use Red Star Holdings’ supply chain, while Red Star Holdings negotiates to use Matt’s marketing and distribution chain to reach Australian customers. Indeed, the outcome of Matt’s transactional negotiation is likely to be entirely, distributive agreement. The distributive agreements would result since Matt and Red Star Holdings are in a distributive negotiating situation, where Matt and Red Star must appear to divide their resources. The negotiation is likely to lead to a competitive rivalry. The division of resources should be equal. More importantly, the distributive bargaining has the likelihood of being beneficial to Matt, as Red Star Holdings is relatively of little consequence, as well as since Matt must maximize the value of any single deal he makes. On the other hand, integrative negotiation is not suitable, as Matt does not hope to share resources since he wants to make considerable revenues from the deal. Q2. How would Matt effectively prepare for negotiations considering the international context of engaging with business partners from China The Hofstede's model of cultural dimensions is appropriate for the case of international negotiation that Matt seeks to pursue. The framework proposes five dimensions for analysis of cultural issues anticipated when Matt (a Westerner) negotiates with the Red Star Holdings’ (Asian) managers. The five key dimensions are individualism–collectivism, power distance, uncertainty avoidance, long-term orientation, and masculinity–femininity, (Soares et al. 2007). In respect to Individualism–collectivism, Matt should be advised that the negotiators, from Red Star Holdings, are from collectivist cultures hence would most likely give preference to negotiations oriented towards group belonging (Menger 1999). Regarding uncertainty avoidance, Matt should be advised that the negotiators from Red Star Holdings are likely to have low uncertainty avoidance. China has low uncertainty avoidance and values risk-taking and is less rule-oriented. Matt will need to avoid imposing rules or structure unreasonably while negotiating (Chang 2006). In respect to Power distance, concern is given to the manner in which individuals identify with authority. Matt should be advised that the negotiators from Red Star Holdings are likely to have high power distance. The high power distance score indicates that the society experiences deep inequalities of power and wealth. Hence, while negotiating with the Chinese negotiators, Matt should prepare to acknowledge power and authority, and appreciate that most of the negotiator are likely not to be decision-makers and will need to consult with higher authority (Miles 2003). Lastly, Masculinity–femininity depicts the overriding values rooted in gender. In the highly masculine countries like China, preference is given to masculine traits, success, and achievement. Hence, Matt will need to keep in mind that the Chinese negotiators will keep the male and female roles distinct. Additionally, he will need to avoid discussion of emotions or making emotionally oriented arguments (Miles 2003). In respect to the theory of Cultural Values on International Business Negotiation Process, the first step would be observance of goal. Here, Matt should be advised to prepare to meet establishing long-term relationships first, as Chinese negotiators place emphasis on achieving long-term relationships first. The second stage is observance of protocol. Matt should prepare to meet Chinese negotiators who are less formal and show little regard for formal protocols. The third step is observance of communication. Here, Matt should be advised to prepare to meet Chinese negotiators who tend to speak softly, with little gestures, as well as prefer the use of indirect language. The fourth step is observance of time. Matt should be advised to prepare to meet negotiators who are less sensitive to time and do not necessarily view it as a limited resources unlike his Western counterparts. Instead, the Chinese negotiations from Red star Holdings are likely to spend time interacting to learn from each other. They will also have relaxed schedule (Numprasertchai 2011). The fifth step would be observance of risk propensity. In this regard, Matt will need to prepare for Chinese negotiators who give preference to predictable situations, where they are strict to the rules. The sixth step would be observance of Groups versus individuals. Matt should be advised to prepare for Chinese negotiators who base their decisions on group rather than individual priorities. The seventh step would be observance of nature of agreements. Matt will need to prepare for Chinese negotiators who respect contracts yet give personal commitment to the contracts (Numprasertchai 2011). Q3. Strategies and tactics Matt could use in negotiating with Red Star Holdings Negotiating across cultures creates a potentially challenging scenario to Matt. However, there are tactics, as well as strategies he can use to address the challenges of cross-cultural negotiation. The first tactic would be to be prepared. The significance of being prepared ahead of negotiation cannot be overemphasized to Matt. This comprises making rehearsals and studying of the cultural background of the Chinese negotiators he hopes to meet. As Horst (2007) explains, a vital tactic in undertaking cross-cultural negotiation strategy should revolve around effective preparation. For instance, apart from analyzing the underlying issues that have brought Matt and Red Star’s negotiators to the table, he should as well gain deeper insight into the other party’s cultural background. This is particularly important, as it will indicate to the Chinese negotiators that Matt has respect for their cultures. The outcome of this would be building trust and credibility right from the start. Additionally, it will help Matt to decide the right tactics he may apply to avoid irritate Red Star Holdings’ negotiators (Moore and Woodrow 1998). At the same time, Matt will need to be self-aware of his cultures. This will enable him to gain deeper insight into the likely cultural conflicts and similarities that could emerge during the negotiation. Based on the new insights, an effective culturally response strategy would be for Matt to modify his approach accordingly, or a strategy Pratt calls joint strategy. However, as Lewicki et al. (2007) argue, modifying the approach also has significant limitations. This is since even if Matt modifies his approach accordingly, there is no guarantee that it will mechanically lead to better negotiation outcome, as Red Star's negotiators may also modify their approach to fit the Western cultures. This may lead to further disasters. For instance, Red star's negotiators understand that Matt, as a Westerner, is likely to start the negotiation with a tremendous offer in the hope of leaving room to make concessions. Matt also understands that the Chinese negotiators are likely to start the negotiation with interaction to learn about each other’s. However, when both parties act out of respect for each other and adopt the approaches of the other party, it is likely to lead to a negotiation disaster. To avoid such a scenario, there are other alternative strategies that Matt should employ. He should use a unilateral strategy. This may involve engaging an agent who is familiar with the Chinese cultures. The agent will, in this regard, supervise Matt as he makes negotiations while advising him accordingly. This would be effective when Matt has limited time to learn Chinese cultures. It will also effectively overcome Ms Zhang’s unwillingness to engage in face-to-face negotiations. Since the agent understands Ms Zhang’s cultures and language, he is capable of engaging both Ms Zhang and Matt by working as the language and culture interpreter. This strategy has a potential to allow Matt to succeed in launching Cosmo Clothing in China. The reason for this is that an agent who understands Chinese cultures is likely to lead to a successful negotiation, where Matt succeeds in launching in China while Red Star succeeds in selling in Australia. Matt should as well use a joint strategy. This would involve engaging a mediator who will conduct the introduction before withdrawing to let Matt take over. He will as well translate most actions and words for Matt to avoid misunderstandings in communication. The mediator will as well inform Matt on when to maintain his home culture, as well as when to adopt the Chinese culture (Amanda et al. 2005). I think that Matt will overcome Ms Zhang’s unwillingness to engage in face-to-face negotiations when he uses a mediator. Since the mediator understands Ms Zhang’s cultures and language, he is capable of engaging both Ms Zhang and Matt by working as the language and culture interpreter. The joint strategy also involves Matt adopting the other party’s approach. It may demand that Matt makes some conscious adjustments to his own approach to make it more appealing to Red Star's negotiators. Hence, instead of seeking to behave like the Chinese negotiators, Matt may apply the strategy to ensure that he maintains a firm grasp of his personal approach, although he flexibly makes adjustment to help create relationship with the other party. For instance, as he is expected to act in a rather extreme manner, he may avoid acting in an extreme manner while lowering himself to building relationships like the other party is used to while negotiating. Next, Matt should as well avoid stereotypes. In order to execute an effective cross-cultural negotiation, Horst (2007) suggests that a negotiator should get beyond his cultural misconceptions and stereotypes. An attempt to make assumption may serve to promote distrust and erect barriers that negatively affect Matt’s goals, or goals of Red Star’s negotiators. Matt will also need to stay relaxed during the negotiation process. According to Amanda et al. (2005), in the process of cross-cultural negotiation, an effective negotiator has to remain relaxed, as well as show openness towards the other party. Again, Matt should be ready to apologize if he acts in a way that the other party views to be awkward. He should as well demonstrate a strong desire to carry on with the negotiation enthusiastically. These should help overcome Ms Zhang’s unwillingness to engage in face-to-face negotiations. Q4. Ethical considerations that should be considered in Matt’s predicament The unethical behaviour in the scenario is expounded by issues, such as hiding information or knowingly selling defective goods. Matt has learnt that Red Star Holdings sells defective shirts that cause severe rashes on people who wear them. Matt has also learnt from Commonwealth Scientific and Industrial Research Organisation (CSIRO) that establishing the cause of such reactions would take at least two years. Matt is in dilemma. He may keep quiet and procure the fabrics from Red Star for considerable profits. He is also aware that a two-year delay because of undertaking further testing of certain fabrics is likely to bankrupt him. Keeping quiet and pursuing the contract in order to sell defective goods would amount to unethical conduct. However, the situation does not present a cultural conflict in China, despite the potential of leading to contrasting business practice in Australia. However, as Lewicki et al. (2007) suggests, Matt has several options that he may employ to avoid problems in negotiation. Pitta (1999) suggested a means to avoiding cross-cultural ethical differences called avoidance. Matt should be advised to avoid confronting the issue of Red Star Holdings selling defective shirts that cause severe rashes on people who wear them. In Pitta’s (1999) view, avoidance entails the negotiators opting to ignore the problems while hoping it would go away or resolved once the contract is created. Avoidance is particularly helpful in the case of Matt since the costs of confrontation are likely to be high. For instance, bringing the issue that the fabric causes severe rashes on people who wear them may halt the negotiation. This would lead him to be bankrupt after two years. Indeed, Pitta (1999) narrated a scenario where a supplier may engage in unethical conduct, yet a business may avoid confronting the issue of Red Star’s defective fabric as it may lead to losses of sales or market share. 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