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Business Negotiations Between ABC Electronics and 24-Eight

The following case scenario is relevant for all three (3) Questions. Please read it carefully before attempting the questions.

ABC Electronics is a global conglomerate involved in the manufacturing, distribution, marketing and sales of consumer products such as household appliances, mobile phones, TVs and other consumer electronics. Its headquarters are in Japan, with distributors in most countries except for China and some of the African countries. There is growing shareholders' pressure on ABC Electronics to grow its sales and market share, given the slowing economy in the developed countries.

You are the founder of 24-EIGHT, a small group of three retail outlets that distribute and sell groceries, household appliances, toys and other miscellaneous items in Guangzhou, China. 24-EIGHT has been established for five years and sales had been growing by more than 20% every year. It appears that despite facing stiff competition from larger local retail chains, the 24-EIGHT retail stores are popular with consumers, especially due to your in-depth
knowledge of local consumer preferences. You are also well-known within the business community and have developed strong ties with landlords, government agencies and other stakeholders.

Most of the products sold by 24-EIGHT are local brands. Hence, you wish to expand your business into international brands by seeking to be appointed as the sole authorized distributor of ABC Electronics in Guangzhou, China. You believe that there is a high demand for Japan-made products due to the increasing income level of consumers in Guangzhou and the perceived quality of a Japanese brand. There are many imitation products of ABC Electronics in Guangzhou but with poorer quality.

The projected sales by 24-EIGHT of ABC Electronic products are likely to reach close to US$800,000 by the end of a 3-year period. Your senior management team advised you that it would be fairly important for 24-EIGHT to be the exclusive distributor in order to seize market share within this 3-year period.

Since you have little experience in the marketing and sales of international brands and providing post-sales service for international brands, you know that ABC Electronics would likely have reservations in appointing you as an authorised distributor of their products (let alone as an exclusive distributor) in Guangzhou.

Hence, you wish to set up a meeting with the representatives from the headquarters of ABC Electronics to discuss this matter further. However, you anticipate that ABC Electronics would only be sending their junior representatives to the meeting. The items for discussion during the meeting would include:

- An appointment of 24-EIGHT as the exclusive distributor for ABC Electronics products in Guangzhou for a specific period.

- A request for ABC Electronic to provide free sales and technical training for one year.

- A request for ABC Electronics to co-fund up to US$15,000 for a huge publicity blitz and launch event to announce its appointment of 24-EIGHT as a distributor in Guangzhou.

Question 1
(a) For a successful integrative approach to negotiations, you must first establish the appropriate environment and context for the negotiation to take place.

Examine the four (4) key contextual factors that are critical to the proposed meeting.

Identify and discuss the key contextual factors, and
Analyze the actions that you must take to establish the right context.

Support your analysis with specific examples, based on the case scenario above.

(b) Identify and analyse two (2) major sources of power which you possess vis-à-vis the
representatives from ABC Electronics. Explain how you should leverage on these two (2) Sources of power to achieve positive results from the meeting.

Question 2
To prepare yourself for the meeting, you would need to formulate a plan on how to successfully implement a win-win negotiation strategy. Use the 10-step planning process to examine and discuss in detail any seven (7) of the 10 steps that are required for achieving a positive result for both ABC Electronics and 24-EIGHT, including the selection of a choice of venue for the meeting.

Illustrate the steps with specific examples that are relevant to the above case scenario. To demonstrate a good understanding of the concepts, your plan should:

- Frame the issues in a way that is positive and mutually acceptable to both parties and would preferably be presented as goals to be achieved; and
- Demonstrate critical thinking skills in the definition of bargaining mix, interests and resistance points, among other things.

Question 3
Conduct research into Hofetede's four cultural dimensions for China and Japan, given that the negotiating parties are from these 2 countries.

Assess the characteristics typically exhibited by the above countries under the Hofstede's dimensions. Evaluate how these characteristics would likely influence the representatives' behaviour during the negotiation process.

Identify two (2) significant risks of being too culturally responsive to such characteristics and discuss how you would mitigate such risks.

For your research, you should refer to textbooks, research articles and/or validated sources of information available on the internet. Remember to cite the sources of your research.

Solution Preview

Question 1: Identify and discuss the key contextual factors

Consider the four (4) key contextual factors relate to the negotiation process that assists in reaching the desired results by both groups. The core interests of all parties provide an opportunity to reaching out with each in an awarding way that satisfies the bottom-line. For instance, the following can consist of factors, such as;

- Identify and defining the problem through communication matrix for verbal expression to assure (a) substantiate issues addressed in the initial timeframe of the negotiation meeting accordingly (b) the exchange of information pertinent to both sides in an effective way of expression (c) outlining key interests and approach during the negotiation interaction, even, if only junior representatives leading the meeting than real higher decision makers.

- Understand the problem and bring interests needs to the surface (as in the process to redirect back to the initial interests of concern, i.e., to being the sole distributor in China that can assists both parties in reaching the goals).

- Generating alternative solutions to the problem or interests ( consider the factor in showing the alternatives in ways that presents a compromise, as in, a shorter time frame to operating the proposed sole distributor for a shorter timeframe).

- Evaluate those alternatives and select among them (offer more than one options for resolving the main issue or ...

Solution Summary

The review into business negotiation to decipher the best possible action plan.