Discussion Class 2

Discussion Class 2 (2 periods)

Teaching aims:

Help students put theories they learnt into practices;

Teaching points:

Read the case intensively

Study the case by using the knowledge learnt in theoretical classes

Preparation work for discussion

Bring the notes on negotiation strategies and tactics to the classes;

Each group takes at least one dictionary for better understanding of the case;

Requirements

Read the case carefully and study it with teamwork spirit.

The leader of each group arranges the tasks for each member.

Answer the discussion questions designed for you at the end of the case in one period of class. Get ready for the oral presentation in the next period.

Case study 2

Japan Airline decided to buy10 new Mc-Douglas passenger planes from the American McDonnell Douglas Corporation (MDC). Managing Director was appointed as the leader of the negotiation team, financial manger chief negotiator, and technology department as the assistant.

Shortly after the JAL?s representatives arrived in the USA, American McDonnell Douglas Corporation called and informed them that the negotiation was beginning the next day. The three Japanese representatives arrived at the meeting room slowly, as if they were still very tired. A group of negotiators from MDC were already seated well at one side of the negotiation table. The negotiation began and the Japanese negotiators sipped away their coffee, apparently relieving themselves from the jet lag. The MDC?s chief negotiator is astute, crafty and practical, though they could take advantage of the tiredness of the Japanese team. After directly reiterating the intention of both sides as a buyer and a seller, the USA side quickly turned to the main points of this negotiation.

From 9 o?clock to 11:30, as three projectors turned on one by one, the USA side provided mountains of captions, data, figures, tables, graphs, computer patterns and pictures, supporting evidence and navigation scenes and the like, to prove that the technology used in the plane was near perfect, attempting to create an environment like the Disneyland so as to lead the counterparts into believing that the features and the prices of the MDC?s jetliners were beyond any nitpicking. However it was quite unexpected that the 3 Japanese representatives remained silent all through the process, not say a single word.

The USA team leader felt perplexed: “Didn?t you get it? What is it that you don?t understand?”

JAL term leader smiled: “Everything.” They explained that they did not understand all the

things the American had just said.

The chief negotiator added quickly, “What do you mean by …everything?? Would you please tell us more specifically when you began failing to get it?”

The Japanese assistant negotiator apologized, “I?m sorry. It?s from the moment when the curtain was drawn.” And the Japanese chief negotiator grinned, nodding his agreement with his company.

Even though the team leader of the TDC was very angry abut the JAL team, he still controlled himself and asked what they could do for the JAL team. JAL required USA part to repeat the whole process of representing the information of the plane.

During the two and half hours?repeat, the USA party lost their initial enthusiasm and confidence. Was the JAL team joking with the seller? No, the JAL team did not want to lose their advantage by showing their understanding on this deal. They did not want the seller to misunderstand their understanding as a kind of flattering. The USA party, of course, failed to understand this implication and was unable to realize they had lost the battle.

When the negotiation entered into the core process, the cunning JAL representatives suddenly became slow in reaction, or even could not understand what the other side meant. This irritated USA party. The USA party thought they were negotiating with fools. The well-prepared argument, supporting materials and reasoning were all useless. The USA party only hoped to end the negotiation as soon as possible and then directly asked: “Our plane is the best, and the price is reasonable. And do you have any disagreement?”

At this moment, the JAL team appeared to become tongue-tied out of nervousness. He stammered, “The first…first… first…”“Please take your time,” said the American CN in spite of irritation in mind. “The first…first… first…”“Do you mean the first point?” the American added promptly. The Japanese CN nodded “Yes”. “All right, what is your first point?”the MDC CN asked impatiently. “Pri… pri.”“Do you mean …price??” The Japanese nodded his head again. “OK, this is negotiable. Then what?s the second point?”“Fea…fea…”“You mean feature? As long as your JAL puts your request for improvement in writing, we?ll satisfy it,” blurt out the USA CN.

Till then, what had the JAL side said? Nothing. What had the MDC side done? They had helped the Japanese side to deal with themselves. First, the American team had to guess that the JAL meant, and then made an immediate promise without careful thinking. Thus,MDC negotiators were actually negotiating with themselves, leaving the initiative to the counterpart.

McDonnell Douglas Corporation made easy reconciliation to the JAL side while the JAL side wanted more than that. This deal was worth about billions of USD, the discount should be within a proper range. However, the JAL side pretended to know nothing about this and asked for a 20% discount. The other side was very surprised at this offer, but still gave 5 % discount as a sign of sincerity.

The two sides both justified their offer with a lot of reasons. In the second round of offering, JAL asked for a price cut of 18%, while Mc-Douglas insisted on 6%. They then proposed to postpone the negotiation two day later.

Even though adjourning the negotiation is commonly used strategy to deal with a deadlock in negotiation, Mc-Douglas expressed that they would rather not sell than sell at low rice. JAL realized the seriousness and also made compromise.

The negotiation began again, and the JAL said that they would buy 11 planes if the USA side would allow an 8 % discount from the seller. Mc-Douglas agreed and congratulated JAL that they were able to buy the most advanced plane at the lowest price so far.

Discussion questions

1.What strategies did the Japanese negotiators use? Are they effective? Why?

2.What strategies did the American negotiators use? Are they effective? Why?

3.What mistakes did the American make during the negotiation? Why?

4.What opening strategies will you employ to respond to Japanese opening strategy if you were

the American party?

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