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ReferentialAnswerforthecasestudiesandnegotiationsimulations:Chapterone5.Readthecasestudy,andconsiderthequestions:WhatarethemajorreasonsthatChryslermissesitsopportunityenteringChinaautomobilemarket?WhatistheopportunitycostofChrysler?ChryslermadeawrongestimationaboutthedevelopmentofChineseautomobilemarketanddevelopmentofChineseautomobileindustry.Chrysler'sinterestinsellingjustaprocessinglineisastrategicblunder.ItsopportunitycostismissingthechanceofenteringChineseautomobilemarket,themostlucrativeandpotentialone.ChapterTwoDosimulation"AnEconomicRecession“asrequired.Analysis:Theinterestsoftheemployeesaretokeepthepresentjob,whichisalsothebottomlineoftheemployees,andatthesametimetrytonegotiateariseintheirwages.Whileforthemanagementtotideovertherecessionandavoidlossesarethemostimportant.Comparingthetwooptions,thefirstoneisbetterchoiceforthelaborrepresentatives,sinceatleastbothwhite-and-bluecollarworkers5jobsarekept.Readcasestudy(I)anddiscussthefollowingquestions:Doyouthinkthecaseshowstheprincipleofmutualgivingandtakingfornegotiation?Yes.Theselleralsoasksthebuyertogivetheirretailingsalescostandthebuyeragrees,whichisapracticeofgivingandtaking.Howimportantistheexplorationofalternativeoptioninthiscase?Thecostofproducerisproprietaryinformation.Thenegotiationwouldhavefailedifthesellerinsistedonnotgivingtheinformation.Thesellerhereshowsflexibilitybyprovidinganalternativesolutionthatsavesthenegotiation.Readcasestudy(II)anddiscussthefollowingquestions:WhatareChina'sinterestsandwhatareUSinterestsinIPRnegotiationrespectively?China'smajorinterestistogetUSsupporttojoinWTOasadevelopingcountry.HoweveritisalsoforChina'sfutureinterestifsuchanIPRprotectionsystemistobeestablished.USinterestsaretoprotecttheirIPRholders9interestsinChinaandgainmoreaccesstoChinamarket.WhataretheissuestalkedaboutinIPRprotectionnegotiation?Majorissue:IPRprotection;Relatedissue:China'saccessionintoWTO;China-UStradeunbalanceWhatarethedirectandindirectimpactsofChina'seffortintoWTOontheconsequenceoftheIPRnegotiation?China'sefforttojoinWTOwasfrustratedbycountrieslikeUSbecauseofChina'sdevelopingcountryrequirement.ChinamakesuseofacceptingChina'sdevelopingcountrystatusasabargainingleverageinexchangeforUSdemandtoprotectionofitsTRPholderinterest.HoweverChina'sWTOentranceisnotamainissueofthenegotiation,thereforeithasbothdirectandindirectimpactontheresultofthenegotiation.WhataretheimplicationsyouhavelearntfromIPRnegotiation?Askstudentstoanswerthequestion.ChapterThreeReadthecasestudyanddiscussthefollowingquestions:WhatisyourfirstreactionafteryoureadtheGaboncase?Interestingorsurprising?Askstudents'feedback.WehaveasayinginChinese"seeingisbelieving”.Afteryouhavereadthecase,doyouthinkthesayingistrueornot?Dependingonsituations.Inthiscase,"seeingisnotbelieving.”Dosimulation:silksellingAnalysis:theactualresultofthissimulationis$5.36peryard,howeveralmostallstudentsdoingthesimulation,theirresultsarebelow$5.36peryard.Discusswithstudentsthereasonbehind.Chapterfour:Donegotiationsimulation:FinancialLeasingNegotiationAnalysis:Themostimportantinterestofthelesseeisthelengthoftheleasing,thelongerthebetter;whileforthelesser,themostimportantisleasinginterestrate,thehigherthebetter.Inthisnegotiation,theactualresults:thelengthofleasingperiod:5years;wayofpayment:equalshareapproach,SanfengGrouppaysanequalamountateveryendofamonth,whichisabout24.19millionyuan;servicefee:1.5%of1200millionyuan;leasingrate:7.76%of1200millionyuan;additionalbenefitforSanfengGroup,thelengthofdepreciationyear:reducedfrom15yearsto5years,areductionof250.8millionyuanoftaxesChapterfiveReadthecasestudyandanswerthefollowingquestions:Inthenegotiation,onepartyusespositionalbargainingandtheotherprinciplednegotiation.Tellwhousesprinciplednegotiationandhowhasheappliedit.Tompracticesprinciplednegotiationbynothagglingwiththeinsuranceadjuster,butbyemphasizing“whatisthestandardforreplacementofacomparablecar”.Hasthenegotiationproducedawinneroraloser?Everyoneisawinner.Simulation:HotelSellingTipsforthesimulation:theactualresultofnegotiationpriceforthecaseis$300000,plus$25000donationforhotel'sfinancialaidfundforthosewhomaynotabletopayfortheirstay.ChaptersixDosimulation“ADamontheRiver"asrequired.Analysis:Thethreepartiesfinallycametoasolutionafteracarefulanalysisofeachother'sinterests.Theagreementincludesreducingtheoriginalcapacitydesignundertheconditionthatthelocalpeople'selectricitydemandissatisfied.Themodificationofthedesignguaranteesenoughwaterflowatthelowerreaches,meanwhilemaintainingtheeco-environment.TheagreementalsodecidestoestablishaprotectionfundforAmericancranes.Itisimportanttohavestudentsrealizewhyreducingthecapacityofthedamisawin-winsolutionandlearnnottoturntogovernmentforhelpasChineseareusedto.Theoptionofreducingtheoriginalcapacityisbasedoncarefulsurveyofthelocalneedforelectricityandwaterneedforfarmers.TheprotectionfundcomesfrommoneysavedfromoriginaldesignbudgetReadthecasestudyanddiscussthefollowingquestionsWhatarethemajorissuesconcernedinthenegotiation?Directissue:marketaccess;relatedissue:dumpingWhoarethekeyactorsfromtheAmericanside,andfromtheJapaneseside?TheAmericanside:theDepartmentofCommerceandtheUSTradeRepresentative(USTR),TheSemiconductorIndustryAssociation(STA)andindividualchipmanufacturerswerethechiefinitiatorsandcatalystsofthedisputeTheJapaneseside:MinistryofInternationalTradeandIndustry(MITI),thePrimeMinisterandLiberalDemocraticPartyleaderswerealliedwithMITLComparetheAmericanwin-setswiththeJapanesewin-setsandtellwhichismorespecific?TheAmericanwin-setsismorespecificbecausetheyhavetwotargetsandareallsupportedwithspecificmeasuresandnumeraltargets;whileJapanesewin-setsareverygeneralwithoutspecificmeasures.CommentonthefinalresultsoftheSemiconductorscaseandtrytoexplainwhyAmericannegotiatorscouldgainwhattheydemandedfor?BythefinaldeadlineforsettlementsetbytheUS,anagreementwasreached.ItgavetheUSeverythingithaddemanded,includingJapanesegovernmentmonitoringofexportpricesandthird-countrymarkets,andprovisionoffirm-specificmanufacturingdatatotheUSCommerceDepartmenttodeterminewhetherdumping,asdefinedbytheAmericanswasoccurring.TheagreementisaresultofAmerican'sspecificandforcefulmeasurements,besides,theunificationofthegovernmentandtheindustry,andlessdisputebetweendomesticproducersandend-usersmadeitpossibleforAmericansidetoworkforonepurposesetbytheAmericannegotiatorssetinthewin-set.ChaptersevenDosimulation"NegotiationonOilContract“whileconsideringthefollowingquestions:AnalyzeCOcompanyandJ&R'sstakesandpower.COcompany'sstakes:theestimationofthemarketforVCMsupplyisoverdemand,sosuccessfulrenewofthecontractiscrucialforthecompany.Ifthenegotiationfails,thecompanymaylose20%capacity,whichmeansthatitmayhavedifficultysellingenoughVCMtorunitsplantprofitablybecauseCObreaksevenat70%ofratedcapacityanditisnowrunningat87%ofcapacity,including4%tothespotmarket.SoCOcompanyhasahighstakeinthenegotiation.CO'snegotiatingpower:Oneofthelargestandbestknownworld-wideproducersofindustrialpetrochemicals;GoodreputationforfinequalityofVCM,whichisimportantforJ&R;HavingitsownpipelinetoJ&R,whichensurethestablesupplytoJ&R,andrelativelylowercostoftransportation,5%lessofcostcomparedwithsupplierswithoutpipelineJ&R'sstake:TosignthecontractisalsoimportantforJ&R,becauseJ&Risexpandingitsmanufacturingoperationsintheproductionofplasticpipeandpipefittings,particularlyinEurope.J&RbuysalargequantityofVCMandCOisgearedtosupplyingproducttoJ&R'squalityspecifications.InterruptionsinsupplyduetounacceptablequalityordelayedshipmentscanforceacustomerlikeJ&Rtocutbackproductionorshutdownintwoweeks.J&R'spower:CO'ssecondlargestbuyer,taking20%ofCO'scapacityThemarketisgettingoversupplied.Usetable7-1toestimatethetwocompanies'negotiatingpower.Withthechangingsituationofthesupplyanddemandmarket,J&Risgainingupperhandinthenegotiation.Whatalternativescanyouexplore?Why?COcompanycansellitsVCMatinthespotmarketwherepricesandamountsavailablevariedconsiderablyfromweektoweek.Itcouldreplace100millionpoundsofJ&R's200millionpounds/yearVCMdemandbysellingtofoursmall,newcustomers.Togetthesereplacementsalesintoday'smarket(June,1977),youwouldhavetomakepriceconcessionswhichwouldreducerevenuesanestimated$1millionayearbelowyourprovisionalagreementswithJ&R.AlsothereplacementsaleswouldincreaseCO'soperatingandadministrativecosts$150,000ayearforthreeyears.Encouragestudentstoworkoutotheralternatives.Whatisyourcompany'sinterestin,andyour“walkaway“positionfor:MFN,MTC,RTRCOcanacceptMFN,butnotMTCandRTR.MTCwouldallowJ&RtodemandCOtofollowthosesupplieswhosellVCMatlowpricebutalsopoorquality.RTRwouldproduceapotentialcompetitorwithCOcompanyatVCMmarket.Arethefundamentalinterestsofthetwocompaniesinconvergentordivergent?ThefundamentalinterestsofthetwocompaniesareconvergentbecauseCOneedsJ&RtokeepitsprofitandJ&RdependsonCO'sstablesupplyofqualifiedVCM.Whatconcessionsortrade-offareyouwillingtomake?Why?COcompanyhasmadeconcessionsonprice,minimumquantities,lengthofnewcontractandmetering,soinfuturenegotiation,COcompanyshouldmakenomoreconcessionexceptinMFN.Readcasestudyanddiscussthequestions:Whathelptheclienttoincreasehisnegotiatingpower?Thelawhelpstheclient.Asthecaseshowsthathewasputintouchwithanaggressivelawfirmandthedebtwasrenegotiatedwithanotherbank.Thedebtwasdischargedwiththeoriginallenderandallaccountswereclosed.Legalactionwasimmediatelycommenced.Inthemeanwhile,itwasnotedthatsimilaractionsbeforethecourtswerebeingdecidedintheborrowers5favor.Whatlossestheclientwouldhavesufferedifhehadnotturnedtolitigationalternative?Hisonlycourseofactionwastheliquidationofhisbusinessandpersonalassets.ChaptereightReadthecasestudyanddiscussthefollowingquestions:Whatarethemajorproblemsthecompanyconfronts?Themajorproblemistheconflictbetweenmodernizationandexpansionoffacilities,essentialtothecompany'slong-termsuccess,andimprovedprofitsnextyear.Inthecasestudy,betweentheboardandthemanagementaretheconflictofpresentinterestsandthelongtermdevelopment.Whatcanbedonetoaddresssuchconflicts?Itrequirestheboardandthemanagementtotrusteachothertoaddresstheconflicts.Besides,themanagementhastotrusteachotherinordertoworkoutfeasiblemeasurestosatisfythecompany'slong-termsuccess,andimprovedprofitsassuggestedbythehightrustgroupinthesimulation.Theconflictsbetweentheboardandthemanagementarequietcommon.Trytotelltheintereststheyrepresentrespectively?Theboardrepresentsshareholders5interestsandmanagementrepresentsthefirm'sinterests.Theresultsoftwotrialgroupsarequitedifferent.Doyouthinktheresultsreflecttherealsituationofthenegotiation?Yes,theresultsofhightrustgroupandlowtrustgroupcanbeexpectedandreflecttherealsituation.ChapternineThepointofthesimulationisthatstudentsshouldkeeptheirrolesasAmericanorJapanesenegotiatorsasrequiredbythesimulation.Thustheresultofthesimulationisnotsoimportant.Readcasestudyandanswerthefollowingquestions:WhatisthepossiblepersonalstyleoftheChinesestudentinthecasestudy?Herpersonalstyleisavoidingstylebecauseshedoesnotstateconsentorobjectionopenlyandresistspassivelyallthetimebyfindingexcuses,orchangingtopicsorleavingthematterstoothers.ComparetheChinesestudent'spersonalitywiththatofMr.Wang'sfromNewYorkConsumer'sAssociation.Doyouagreethatpersonalityplaysanimportantroleinnegotiations?Yes,certainly,butitdoesnotmeanthatavoidingstylehasnomeritsatall.Forinstance,apersonofavoidingstylecanfrustrateeffortsofapersonofcompetingstyleeffectivelyandmakesthelattertomakeconcessionintheend.ChaptertenDosimulationof“ChinaandJapaninIronOreNegotiation^asrequired.(l)Doyouhavedominantstrategyamongthefourstrategies?Inthefourstrategies,bothChinaandJapanhavedominantstrategy,whichis“notagreetopricerise”,sobothofthemshouldgain2.(2)Isyourdominantstrategythemostbeneficialforyou?Notnecessary,becauseJapanmaychoosenottocooperate,"agreetopricerise“forpurposeofdefeatingChinawhilegaining2.5.Inthatcase,Chinawouldsuffertheworstresult,gaining-3.IfChinaalsochoosesnottocooperate,bothofthemfallintocellone.Readthecasestudyanddiscussthefollowingquestions:Thecasestudyshowshowwecanmakeadecisionwhenweareinadilemma.Doyouthinkyoucanapplythemethodinyournegotiationdecisionmaking?Yes,IagreebecauseIwillbeabletoestimatetheprobabilityoftheotherparty'sdecisionagainstorforme.Whenyouarenotsureofwhattodo,doyouprefertoplayheadortailortomakeyoudecisionbasedonarationalanalysis?Iwouldmakemydecisionbasedonarationalanalysisbecausetotryone'sluckisrisky.ChapterelevenReadthecasestudyanddiscussthefollowingquestions:Howdidthebuyerfindoutthepriceoftheequipmentwasovervalued?Thebuyerdidthecostanalysis.Pointoutthosefactorswhichmakeitpossibleforthebuyertomakethecostanalysis.Theyusedthedrawingsoftheequipmentandbrokeitdownitembyitem.Theythensoughttwoquotesforeachitemtotrytoestablishacompletematerialcost.Theythenobtainedtheseller'sannualreportsforthepastfiveyears.Materialratios,laborratios,overheads,marketingcostsandtheseller'sprofitwerecalculated,andbuiltintoafiscalmodel.ChaptertwelveReadthecasestudyanddiscussthefollowingquestions:WhydidindustriesinUSgoupagainstthegovernmentsupporttorescuetheChryslerCompanyfrombankruptcy?USisbytraditionamarketeconomy,soitiswidelybelievedthatmarkethasafinalsayindeterminingthefateofacompany.Whatwasthemostpowerfulpointofargumentthatlacoccausedtopersuadeothercongressmen?Employmentrate.lacoccadeclaredatthecongresshearingthatthecompanyhad140,000employeesandtheirdependents,4,700autodealersandtheir150,000employees,19,000suppliersandtheir250,000employees,andalltheirfamilies.ThepresidentoftheHouseofRepresentativesmadehislasteffortssupportinglacoccabystatingthathewouldsparenoeffortfor100jobopportunitiesnottosayoveronemillionjobs.NegotiationsimulationTipsforthenegotiationsimulation:bothsideshaveacommoninterestofpromotingsalesoftheirproduct,sotheymayestablishasalespromotionteamconsistingofbothproductdevelopmentspecialistsandsalespersonnel.ChapterthirteenDothesimulationinthischapter.Followthedirectionasrequiredbytheroleandtrytoexperienceculturaldifferencesinthecourseofthenegotiation.Thefinalagreementofthenegotiationisabasedonmutualconcessions.TheWorldBankofficialsagreednottorefertoalldetailedinformationbutthemostimportantnumbersmustappearinthedocumentdeliveredtothevillagers,suchashowmuchtheyhavetopayforthewtertariff.TheChineseprojectofficialsagreedtomentionofwatertariffandthecontributionthatvillagershadtopay.Readthecasestudyanddiscussthefollowingquestions:WhydidMr.DuranddecidenottocarrytheSouthernCandlesproductline?ThereasonisduetothemistakesMr.Picardmade.PointoutMr.Picard'sculturalmistakesduringhisParisvisitafteraresearchintotheFrenchculture.PicardbelievedhehasagoodunderstandingoftheEuropeanculturebasedonhispasttripstoEuropetoattendinternationaltradeshows.HewasconfidentthathisbusinessexperienceintheUSmarketwouldcarryovertotheEuropeanmarket.Manybusinessmenmakethissamemistake.Mr.PicardwasimpressedtoseetheFrenchbusinesscardsprintedinEnglishandFrench,whichmaymeanthathisbusinesscardwasprintedonlyEnglish.In
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