Conflict Resolution at the Place of Business - Essay Example

Running Conflict Resolution at the Place of Business Conflict Resolution at the Place of Business Introduction This paper discusses a negotiation between the author and members of his organization with the managers of a French-based company about changing the distribution relationship with this company. The negotiation presented aspects of understanding and coming to agreement which are common in global negotiations, but added some elements of international culture and differing attitudes to negotiating strategy and tactics. In the end, the author's team walked away with a satisfactory conclusion, but not without a good deal of inefficient probing and testing on both sides. The lessons learned included general negotiating skills, and an increased understanding of how cultural predispositions and assumptions can add complexity to a set of negotiations. This complexity must be understood and overcome in order for both parties to arrive at a satisfactory conclusion. Background and Positions of the Negotiators The facts of the case are as follows: Our company (for this paper, "USCo"), a large, Midwest-based American medical company, had recently decided to increase its direct presence in the European healthcare market. Up to now, our company had some distributors in Europe, and some European countries in which we used distributors. While we intended to keep distributors in the smaller markets, such as Eire and Greece, we regarded the nine "major" countries as too important to leave to a distributor. The company we were negotiating with (for this paper, "FrenchCo") had been distributing our product, a line of sophisticated automation instruments for microbiology, for over 10 years in Italy and France. The Underlying Assumptions of the Case USCo's viewpoint: USCo had been successful with its automated instruments throughout the world, but was lagging against other key competitors in the European market. Of particular concern was our market share in Germany, France and Italy. In some European countries, such as the Nordic countries, we were direct and enjoyed a number one position in the automated segment of the market. We felt that FrenchCo, despite its strong reputation in microbiology, had not truly understood the benefits of our automated systems. Their ability to gain market share was unimpressive. We felt that FrenchCo's managers were hidebound and focused on "traditional" manual technologies. FrenchCo's viewpoint: FrenchCo had started with Louis Pasteur, and defined microbiology not just for France, but for the world. FrenchCo's mission was to offer the very best microbiology products, be they automated or manual, to the global market. Although FrenchCo was a smaller company than USCo, it was nevertheless a leader due to its history, its emphasis on quality, and its deep understanding of the science of microbiology. Expectations for the meeting: We at USCo could only guess what FrenchCo's attitudes were. We guessed that they knew we were unhappy with our current distribution results, and that they had watched us develop direct distribution in European countries around them. We felt that they were trying to develop their own automated instruments, but did not know how far along they were in the development. After the negotiations were completed, we hired one of the FrenchCo managers, and learned a good deal about FrenchCo's expectations. As it turned out, FrenchCo was developing an instrument, but did not want us to know that. While they were also unhappy with the business results, they felt that they could learn about our technologies and use that knowledge to effectively compete against us. They also felt that we would fail if we came to the French market without them. They were not particularly concerned about the Italian market. Start of the Negotiations We suggested the meeting time, but FrenchCo chose the venue. We met in a leafy suburb of Paris. The President met us at the door after a 40-minute wait. We were expecting to be led to a conference room. Instead, the President offered to take us on a tour of the 'campus.' He showed us the horse stables where Louis Pasteur first inoculated horses, then the massive R&D laboratories. After an hour tour, he took us to lunch in the company's private dining room. We had a four-course lunch. Although our President tried to bring up the purpose of the visit several times, FrenchCo's President steered the conversation away to a discussion of Pasteur's R&D efforts on this very site. Our team learned nothing of their business position during lunch. We then convened after a half-hour break at the conference room. The President of FrenchCo arrived with his staff of five people and their in-house lawyer. Opening Position Our President opened with a statement that outlined our position: We valued our 10-year relationship Our company had decided to increase its direct presence in Europe We therefore needed to go direct in France and Italy, which we had the right to do with a 6-month notice in our distribution agreement. We were here to negotiate an amicable parting The FrenchCo President then opened with a statement: FrenchCo was the market leader in microbiology in France, and would always be so USCo would not be successful in the French market If USCo wanted to break up the 10-year relationship, it would cost USCo a good deal He then deferred to his lawyer, who spelled out a series of French precedent on distribution law. Our President asked for a recess until the next morning. At our hotel that afternoon, we discussed our positions. In a role-playing exercise, I took the position of the FrenchCo President. I represented my needs as follows: 1. I was proud of our accomplishments at FrenchCo 2. I was somewhat disdainful of any American company that felt it could teach us about microbiology 3. I was concerned about how my customers would react if we told them that we lost the distribution contract. Our President then suggested the following strategy for the next morning: Open with our appreciation for FrenchCo's unique position in the world of microbiology, and its long-standing reputation. Represent how difficult it would be for any company to succeed in the footsteps of FrenchCo, particularly in its home territory. Regret that the Board of USCo had pushed him to this decision, and that the decision had more to do with ego and pride than business logic. Ask for their help in this difficult task of transition. Second negotiating session The President of USCo opened with a statement of the points outlined above. The President of FrenchCo was silent for a while, then consulted with his people. He then came back with a formal exposition. His key points were (1) He was pleased to hear that USCo's President recognized the difficulty of succeeding in the French market, (2) He could understand the unreasonable demands of an illogical Board, and (3) they would do their best to assure a smooth transition because the customers were theirs, in fact, and the customers came first. The FrenchCo President then said that they could not announce a departure from this segment of the market without a counterbalancing argument about other initiatives that represented FrenchCo's continual growth in technology. Our President offered to establish a joint venture on an R&D basis for USCo's next generation of automated instruments, and that this could be negotiated and announced at the same time as the change in distribution arrangements. Discussion While this case represents a clash of differing cultures, most of the needs and barriers could have been encountered in a negotiation between two American companies. We needed to understand that FrenchCo's President was proud of his company's leadership in this field. He was somewhat disdainful of our technology and background. Until we were able to recognize their expertise and history, we could not move to the meat of our negotiating goals. In our post-negotiation huddle we were thankful that FrenchCo was not trying to retain the distribution. Rather, we found that they had accepted the point. They were looking for a face-saving way to exit the agreement, and our President's recommendation of a joint R&D partnership offered that way to accomplish it. While we were concerned that FrenchCo could later become a competitor, we felt that we had accomplished our primary goal, which was a friendly transition to direct distribution. Bibliography Bhatnagar, D. H., & Y., K. (1998). Conflict Management Style: Accounting for Cross-National Differences. Journal of International Business Studies , n.p. Fisher, R. U. (1991). Getting to Yes: Negotiating without Giving In. New York: Houghton-Mifflin. Harvard Business Review. (2000). Harvard Business Review on Negotiating and Conflict Resolution. Boston: Harvard Business School Press. Jackie Mayfield, M. M. (1998). How Location Impacts International Business Negotiations. Review of Business , 21-23. Read More