Negotiation

BCO313 NEGOTIATION MID-TERM EVALUATION Task brief & rubrics

Task

The midterm evaluation consists of a critical thinking and analysis question based on the ideas and theories that have been examined in the course, as well

academic and other sources supporting, where appropriate, the answer provided.

 Individual written assignment

 Student must build a coherent discussion or argument in essay format, analysing the facts presented in relation to the theories and issues that arise in

negotiation.

 Answers should be fully developed, that is including an introduction, a body and conclusion.

 QUESTION: Read the case study below and then answer the questions that follow.

Formalities:

 Word count: 1000 to 1200 words

 Cover, Table of Contents, References and Appendix are excluded from the total word count.

 Font: Arial 12 pts.

 Text alignment: Justified.

 The in-text References and the Bibliography must be in Harvard citation format.

Submission: Week 5 – Via Moodle (Turnitin). 31 October 2021 at 23:59 CEST

Weight: This task is 40% of your total grade for this subject.

It assesses the following learning outcomes:

 Outcome 1: To identify and explain the importance of preparation prior to a negotiation.

 Outcome 2: To demonstrate a comprehensive understanding of key negotiation concepts and the ability to distinguishing between integrative and

distributive negotiation styles.

 Outcome 3: To identify and explain tactics in how to dealing with an aggressive distributive style in negotiation.

Read the following case study to answer the questions that follow.

Background

EspelTech is one of the world’s major providers of global supply management software and services, which helps companies reduce costs through

efficient product and services sourcing. EspelTech has dealt with more than $50 billion worth of products and services in the oil and gas, other natural

resources, retail, transport, finance, and industrial sectors for customers including General Motors, Nestlé, Shell, Japan Energy, Mitsubishi, and Cadbury

Schweppes.

Shanghai-based MJT is one of the biggest gaming and hospitality companies in Asia and is owned by Chinese businessman Tan Wu Bo. MJT has been a

EspelTech client for six months, and the companies have signed an agreement to conduct two projects. The first, completed in March 2014 and

tremendously successful, saved MJT some $1.5 million, and the second one is about to start. Impressed with the results, MJT wants to explore the

possibility of other alliances with EspelTech.

As such, a meeting is arranged between MJT’s Senior Vice-President of Finance Iris Ma and EspelTech’s Regional Managing Director Drake Dubois, and

attended by MJT’s Vice-President for Procurement Henry Chow and EspelTech Sales Group Director Layton Pang.

Ma is keen to explore more projects with EspelTech and has tasked Chow to follow up with EspelTech as soon as possible. The managing director of

EspelTech suggests that a session be arranged with key stakeholders from both companies to discuss and assess possible opportunities for other MJT

projects.

Possible Deal

Ma and Chow agreed to the suggestion and asked that a proposal be submitted to MJT after the opportunity assessment meeting that was attended by

Chow, his assistant Mary Xie, who is also the purchasing manager, and two members from EspelTech. Both parties identified ten possible projects.

Xie asked for a proposal to be submitted to MJT through her, and EspelTech provided a competitive price package that included services over a twelve-

month period. As is to be expected from a Chinese company like MJT, Xie asked for a reduction in the licensing fee, additional programme management

days (at no extra cost), and an extension of the software term from twelve months to twenty-four months.

In reply, EspelTech put in writing its discussions to date with MJT:

1. MJT had agreed that EspelTech could add value to the projects identified.

2. MJT would sign for a ten-project package to get a competitive price.

3. If EspelTech could meet MJT’s demands, the latter would sign the contract by May-end 2005.

Xie agreed to point one above, but was non-committal on points two and three. After much discussion, EspelTech agreed to lower its fee and provide MJT

additional program management days at no additional cost. However, EspelTech said it could not agree to extend the twelve-month term for use of the

software without charging extra.

Then, to complicate matters further, Xie suggested that MJT could not commit to an agreement even if all the issues were resolved. The most recent

negotiations were conducted quite quickly since EspelTech knew that Xie was not the decision maker and approval had to come from her top

management. It is quite usual for Chinese companies put in place a structure whereby the foreign negotiator deals with multiple tiers of negotiators

before working through the final deal with the senior key decision maker.

Negotiations to Date

EspelTech’s team had received some of the best sales training available. EspelTech’s primary concern was how likely MJT would be to enter into an

agreement even if the issues were resolved, and within what time frame.

MJT argued that the proposed price was beyond what it could afford, although it acknowledged the need for help from EspelTech to implement the

projects, and that it needed twenty-four months to execute the ten projects due to its lack of manpower.

EspelTech took the position that, while it was prepared to look into the fee structure and program management term as part of the total package, the

request for twenty-four months was not reasonable. Nevertheless, despite arguing that other organisations were able to implement ten projects in

twelve months, to satisfy MJT, EspelTech negotiated a mid-way solution: a maximum of eighteen months.

When one week passed and there was no response from MJT, Hyper- Hawk asked if it would be prepared to sign if EspelTech acceded to its three

requests. Xie replied that she would submit the proposal for approval to her superiors, Tan and Ma, but added that there was no guarantee the

agreement would be signed by the end of May.

From EspelTech’s perspective, all the issues presented by MJT had been resolved—yet there was still no deal. When asked about the status of the project,

MJT cited staff turnover, but then mentioned another possible IT project where there was a clear need for EspelTech. The discussion ended with MJT

requesting that EspelTech prepare the preliminary work and submit yet another proposal.

Based on the updated information, it appeared that the IT project might get underway earlier than the previously proposed ten projects. Moreover, given

that this project had an entirely different scope, there was a strong argument to negotiate a separate deal for it. Whichever proposal MJT wished to

undertake first, EspelTech was ready to negotiate and finalise an agreement, but it could not yet tell whether the latest development was a genuine

project or a further stalling tactic.

Midterm Questions

1. Use your own words to outline the key issues in the negotiation? What were the main objectives of the parties? Provide specific examples and

explain your answer.

2. What is the significance of EspelTech putting what had been discussed with MJT in writing?

3. Critically assess and evaluate the importance of a BATNA in negotiations. What was EspelTech’s BATNA?

4. In negotiations what is ZOPA? What is the ZOPA in this scenario?

5. Clearly explain your understanding and knowledge of both integrative and distributive negotiation styles. Provide sources.

6. What negotiation style would you say MJT used in their negotiations? Provide specific examples and develop your answer.

7. What obstacles did EspelTech face when negotiating with the Chinese?

Rubrics

Exceptional 90-100 Good 80-89 Fair 70-79 Marginal fail 60-69

Knowledge & Understanding

(20%)

Student demonstrates excellent understanding of key concepts and uses vocabulary in an entirely appropriate manner.

Student demonstrates good understanding of the task and mentions some relevant concepts and demonstrates use of the relevant vocabulary.

Student understands the task and provides minimum theory and/or some use of vocabulary.

Student understands the task and attempts to answer the question but does not mention key concepts or uses minimum amount of relevant vocabulary.

Application (30%) Student applies fully relevant knowledge from the topics delivered in class. Uses effectively additional cases and theories

Student applies mostly relevant knowledge from the topics delivered in class. Used additional cases and theories

Student applies some relevant knowledge from the topics delivered in class. Misunderstanding may be evident. Additional cases and theories not correct

Student applies little relevant knowledge from the topics delivered in class. Misunderstands are evident. No additional cases or theories

Critical Thinking (30%)

Student critically assesses in excellent ways, drawing outstanding conclusions from relevant authors.

Student critically assesses in good ways, drawing conclusions from relevant authors and references.

Student provides some insights but stays on the surface of the topic. References may not be relevant.

Student makes little or none critical thinking insights, does not quote appropriate authors, and does not provide valid sources.

Communication (20%)

Student communicates their ideas extremely clearly and concisely, respecting word count, grammar and spellcheck

Student communicates their ideas clearly and concisely, respecting word count, grammar and spellcheck

Student communicates their ideas with some clarity and concision. It may be slightly over or under the word count limit. Some misspelling errors may be evident.

Student communicates their ideas in a somewhat unclear and unconcise way. Does not reach or does exceed word count excessively and misspelling errors are evident.