International Negotiations (Coursework Sample)

International Negotiations
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International Negotiations
Introduction:
Negotiation is part of everyday life from managing businesses to relationships (Bird, & Metcalf, 2007). Negotiations entail two or more parties who have different goals and needs discussing their issues to find a mutually suitable resolution. Since the goals and needs of businesses vary, and their needs are constantly changing, hence, having the right negotiation skills is crucial in order to pave way for peaceful resolutions (Gelfand& Jeanne 2004). Negotiations might be on the issue of lease, sales, merge, service delivery, and legal contracts among many others. Application of effective negotiation skills guarantees successful discussions that solve conflicting issues to enhance business success. Negotiations are common in international business whereby companies must take into consideration merging and instituting legal contracts among other crucial issues. It is essential to understand that a good negotiation strategy plays a key role in the accomplishment of businesses both locally, and internationally (Lewicki & Saunders 2010).This essay seeks to discuss the negotiation case between Volkswagen and the Chinese manufacturer.
One of the benefits of having a good negotiation is that businesses are able to build better and strong relations that help to achieve long term growth. By understanding each other’s needs and goals, businesses are able to forge superior relationships that help them in achieving their set goals, and agenda (Michele& Jeanne 2004). Often times, slight misunderstanding between parties can yield enormous crisis if nothing is done to find a durable solution before things escalate. Effective negotiations help in the provision of quality products and services that meet customers’ expectations. Most operational crises exists because parties involves fail to highlight them, and seek lasting solutions (Nash 1950). However, once parties hold successful negotiations, they are able to deliver lasting and effective solutions rather than short-term and inefficient solutions that do not meet the standards required, and the needs of the negotiating parties. In addition, a good negotiation also helps in the mitigation of future crisis, and conflicts that might arise, negatively affect business relations (Weeks 1992).
Negotiations are about give and take to ensure that all parties involved are satisfied in and create a win- win situation in the long run. An example of a successful negotiation is whereby one party makes concession that has little meaning to one party, but to other party compromise is something great. This is often the case in salary increment and union fights with corporations to ensure that at the end of the negotiation, employees benefit from higher salary (Fletcher.tufts.edu.2015). Corporations are the party that takes the least in such a negotiation because they are forced to part with more money. However, in the long run, all parties benefit since workers are motivated to work, and the corporation gains from quality work. Hence, effective negotiations are core in the success of business since they foster goodwill irrespective to the differences between parties involved (Tinsley 2004).
Volkswagen and the Chinese manufacturer
Volkswagen (VW) is a leading German carmaker that has been in the market since it established its existence in 1937. It is the first foreign carmaker to establish its operation in China about three decades ago. In 1984, Volkswagen entered into a joint venture contract with China, which involves many government authorities such as the State Planning Commission, Ministry of Foreign Trade and Cooperation, Ministry of Finance, State Economic Commission, Municipal Government of Shanghai, Bank of China (BOC), and China National Automobile Industry Corporation (CNAIC). Volkswagen and China entered into an agreement, and a manufacturing plant was set up in Shanghai. Volkswagen partnered with Shanghai Tractor and Automobile Corporation, BOC, CNAIC and Shanghai Trust, and Consultant Company (Volkswagen 2009a).
Being the first foreign car manufacture in China, VW recorded massive growth and profit margins. In 1986, the VW first plant had about 30,000 vehicles and over the years, the number of vehicles and plants has increased. For instance, in 2003, the company had two plants with about 400,000 vehicles (Volkswagen 2009). In 2002, VW vehicles accounted for about 53 percent of the total vehicles in China and this shows the magnitude of VW in the Chinese car industry. VW has achieved industry leadership following its production of quality vehicles meets the standard of customers. More so, the company is able to issue better pricing making it competitive, and a dominant player in the Chinese car industry. Following an agreement with WTO, the price of imported vehicles declined, but this has not affected VW competitive edge (Volkswagen 2009).
The first negotiation step between Volkswagen and China can be traced in 1977-78 where 6 Chinese delegates went to Volkswagen headquarters in Germany (Volkswagen 2009a).
In 1979, the first VW delegation went to China. These negotiations lasted for about 6 years and they involved about 7 Chinese parties in the China side, and many joint venture contracts were negotiated. For instance, the parties negotiated supply agreement, articles of association, planning agreement, technology transfer accord among others (Volkswagen 2009b).VW and China negotiation lasted for a longer time than most international negotiations because unlike other nations, Chinese nationals take things slow to ensure that no rush decisions are made. Making hasty decision is one of the problems that face many negotiations because parties involved fail to conduct thorough research, and understand all the agreement in the negotiation (Bell & Tversky 1988).
The VW and China negotiations had sufficient time to conduct research, and understand all the details in the negotiation with the rationale of having an effective negotiation that would yield the desired results. In most international negotiations, foreigners want to achieve quick results and start business. Most of the time, they fail to get the right information and the negotiation encounter numerous problems soon after it commences. In the VW and China negotiation, the issue of setting deadline was seen as a negative aspect of impatient (March 1996).
Another noticeable element in the VW and China negotiations is that Chinese prefer having a large group of negotiators (March 1996).This explains why this negotiation involves more than 5 Chinese parties negotiating with Volkswagen. For instance, Volkswagen had about 3 or four delegates while China had about 10 to 20 delegates in the negotiation team where only one person did the talking, others took notes (Pujol 2010). Another aspect that the Chinese used in the negotiation is adhering to thoroughness; this is by asking questions on key areas. This tactic was to evaluate the response of Volkswagen (Volkswagen 2009). More so, Chinese demanded for facts and figures to ensure that whatever Volkswagen was saying was true indeed. This is a crucial aspect because they are parties that might be dishonest and provide exaggerated plan that cannot be verifiable. Backing up any information with factual figures played a crucial role in the negotiation between VW and China. There is no serious party that will be willing to enter into an agreement without getting the right facts and figures to help them make meaningful decisions (Rao & Melvin 1974).
The aspect of asking questions is critical because parties involved get to know a lot of things that can in one way or the other affect negotiation, and agreements made. Additionally, negotiations require togetherness among delegates because any sign of division shows the other negotiating teams lack clarity (Raiffa1982). This is a serious issue in Chinese negotiation because delegates are not able to understand the concept. This is a key negotiation concept that Volkswagen took into account to ensure that they establish effective negotiations with China. Thus, having a disciplined team in negotiation is crucial because the team is able to share their ideas and concept with other parties effectively without any misunderstanding. Furthermore, having a disciplined team is core to the success of any negotiation (Volkswagen 2009). If there are issues within a team, they should be resolved during breaks, but not in front of delegates from other parties. According to Volkswagen negotiation team, effective negotiation with China required parties to be calm and the use of mass media or large Chinese groups would not intimidate or influence negotiation position. In addition, Volkswagen notes that Chinese are patient with their negotiation, and this require other parties to be patient because rushing into conclusions can have negative results. More so, being patient can help negotiators discuss their ideas without pressure of deadline (Volkswagen 2009).
Although most negotiations are about solving existing problems, the negotiation between Volkswagen and China was about establishing a joint venture in car manufacturing (Pujol 2010). The Volkswagen and China negotiations was an international negotiation that helped China to gain from high sales, and to become one of the fast growing markets with great potential globally. Prior to this negotiation, China had relatively few passenger vehicles since most cars were meant for high end markets (Volkswagen 2009). However, after a long-successful negotiation, the parties involved started a plant that has become significant in the Chinese car industry. Today, China has become a key market to Volkswagen vehicles, and this German automobile is the second largest foreign manufacture in Ch...